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Full text of "War time control of industry [microform]; the experience of England"

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Author: 



Gray, Howard Lev' 



Title: 



Wa^ time control of 
industry 

Place; 

New York 

Date: 

1918 



^^-^^.olo-^ 



MASTER NEGATIVE # 



COLUMBIA UNIVERSITY LIBRARIES 
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ORIGINAL MATERIAL AS FILMED » EXISTING FilFJLIOGFmPHIC RECORD 



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Gray, Hox^rard Lcevi^^ 1873 or 4-1945. 

V/ar time control of industry: the experience 
of England ... New York, Macmillan, 1918. 

XV, 307 p. 19tfcn. 



1. Industry and state - Great Britain. 
I. Title. 



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Columbia (HnitJew^fti) 

THE LIBRARIES 




GRADUATE 

SCHOOL OF BUSINESS 

LIBRARY 



From the library of 

John M. Clark 



WAR TIME CONTROL 
OF INDUSTRY 






WAR TIME CONTROL 
OF INDUSTRY 



THE EXPERIENCE OF ENGLAND 



0^^ 



THE MACMILLAN COMPANY 

N«W YORK • BOSTON - CHICAGO • DALLAS 
ATLANTA • SAN FRANCISCO 

MACMILLAN & CO., Limited 

LONDON • BOMBAY • CALCUTTA 
MELBOURNE 

THE MACMILLAN CO. OF CANADA, Ltd. 

TORONTO 



BY 



HOWAP^•D L..-GRAY 

PROFESSOR OF HISIOP.Y IN BKYS MAWR COLLEGB 



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ITftit fork 

THE MACMILLAN COMPANY 

1918 



AU rights reserved 



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COPYMOHT, 1918 

By TME-iVf.40SfeII»LAN COMPANY 



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S«t up an/l elcctrotyped. Publislic^ March, 1918. 






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Tohr) m. Clark 
JUN 18 1957 



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PREFACE 



A part of the information contained in the following 
pages was gathered for the Commercial Economy Board 
of the Council of National Defense. Much of it is not 

easy of access. Despite the summary character of the 
chapters, therefore, they may be not unacceptable to those 
who are interested, as all during these days must be, in 
the industrial activities of the state. Although the ex- 
periments in governmental control of industry here re- 
corded are due to unusual circumstances, the experience 
which they yield will scarcely be without influence upon 
the future. A necessary defect of any account written 
at this time is its incompleteness. The outcome of the 
ventures described is not yet known and the end of the 
tale remains to be told. Even so, the beginning may be 
worth the telling. 

I am indebted to Dr. Mary Alice Hanna and Professor 
William Roy Smith for assisting me in revising the man- 
uscript. 

H. L. Gray. 
Low Buildings, Bryn Mawr. 
December, 19 17. 



INTRODUCTION 



British control of industry during the war has passed 
through three phases. The first, extending over some ten 
months, was a period of tentative action, the Government 
taking only obvious self-protective measures; the second, 
lasting for nearly a year and a half, was a period of 
determined regulation, the Government now being con- 
cerned to increase, the output of munitions of war, to 
secure supplies for the army at prices below those of the 
market, and to regulate shipping; the third, beginning at 
the end of 1916, has proved to be a period of stringent 
control, governmental regulation of the production, dis- 
tribution, and consumption of food being its marked 
characteristic. The doctrine of laissez fake, still re- 
spected in 19 14, had by the end of 19 17 passed into at 
least temporary oblivion. 

These stages in the growing control of industry are 
marked by corresponding political changes. The period 
of hesitant and relatively slight control coincided with 
the regime of the Liberal Cabinet which administered 
English affairs at the beginning of the war. In June, 
1915, this Cabinet was enlarged by the inclusion in it of 
prominent members of the Opposition and became the 
CoaHtion Cabinet. The change was only one aspect of 
the general desire for a more energetic prosecution of the 



Vll 



Vlll 



INTRODUCTION 



1 



war, which at the same moment led to the increased mo- 
bilization of industry. A year and a half later it was 
felt that the Coalition Cabinet was too large a body to 
act as an efficient executive in war time. In consequence, 
there was set up in December, 191 6, the smaller War 
Cabinet, which has since had the immediate responsibility 
for important administrative measures. A more thor- 
ough-going control of the prices and consumption of food 
had, it is true, been decided upon before the War Cabinet 
was constituted. But both movements w^ere indicative 
of a new attitude toward the prosecution of the war, and 
the War Cabinet accepted and carried out with vigour a 
policy which was the expression of its own convictions. 
This third political and industrial phase had not yet come 
to an end in the autumn of 1917. It will lend unity to 
the following chapters to consider for a moment the char- 
acteristics of the periods indicated. 

At home, as at the front, the first ten months of the 
conflict proved to be a time of hurried and somewhat 
inadequate readjustment. Apart from assuming control 
over such supplies, industries, and foodstuffs as were es- 
sential to military needs and the security of civilians, the 
State showed itself loath to interfere in the economic life 
of the nation. Ships were, of course, requisitioned for 
the admiralty and the military, and establishments which 
could easily turn out munitions were enlisted in the Gov- 
ernment's service. Further measures were few. Most 
bold and immediate was the taking over of the railways, 
the first comprehensive essay in state control. Almost 



'I 



n 



INTRODUCTION 



IX 



as prompt were the measures adopted to insure adequate 
supplies of food. Since sugar had been imported very 
largely from enemy countries and would have to be got 
henceforth in a greatly restricted world market, the Gov- 
ernment deemed it best to purchase and control all sugar 
consumed. Wheat, too, it appeared, might become scarce 
unless a surplus store were acquired. The Government, 
accordingly, entered the foreign market as a purchaser 
and bought a supply which before the year had passed 
proved of great utility. After the adoption of these 
measures little was done until a winter and spring of war 
made clear that further action would be necessary. 

This winter of 1914-15 saw a marked rise in the price 
of foodstuffs and coal. As a result, workmen through- 
out Great Britain began to reason that there should be 
either a corresponding increase in wages or an effort on 
the part of the Government to check rising prices. Since 
many producers and middlemen seemed to be reaping 
undue profits, charges of " profiteering " were now heard. 
The nervousness of labour found expression in a demand 
for war bonuses, and after February, 191 5, these were 
secured from employers with more or less friction. 
Where the friction was great the Government had to in- 
tervene, and the spring months of 191 5 were marked by 
vigorous efforts to conciliate labour in order that its 
active co-operation in the prosecution of the w^ar might be 
secured. 

There was the greater need of harmony now that the 
nation was beginning to realize the magnitude of the 



^ INTRODUCTION 

task before it. Such episodes as the battle of Neuve 
Chapelle and the loss of Przemysl by the Russians dem- 
onstrated the imperative need of abundant munitions of 
war. Thereupon began a campaign for the complete mo- 
bilization of such industrial resources as might be directed 
toward the production of military and naval supplies. 
It was initiated by the Munitions of War Act of June, 
1915. the conception and passage of which may be said 
to mark the beginning of the second industrial period of 
the war. 

The introduction of the bill in Parliament had been 
preceded by conferences with representatives of labour. 
In these conferences the trade unions agreed to relax 
many of their restrictions and to permit the employment 
of unskilled workers, but they exacted one concession — 
the requirement that employers' profits be restricted. 
Such restriction the bill imposed. On the other hand, 
provisions for compulsory arbitration of industrial dis- 
putes and for the securing by munitions workers of 
" leaving certificates " were to act as checks upon any in- 
terruption of work. The Defence of the Realm Act had 
already permitted the conversion of any engineering es- 
tablishment in the country into one producing munitions. 
Fortified by the two acts the Government entered upon 
a period of munitions making quite unprecedented, and a 
year later remarkable results could be announced. 

In its mobilization of capital and labour for the pro- 
duction of munitions of war, the Government was more 
happy than it was in dealing with the coal miners. This 



INTRODUCTION 



XI 



1 



large and influential body of workingmen refused to come 
under the Munitions of War Act; and, when the Govern- 
ment relative to a threatened strike in South Wales 
endeavoured to enforce the measure, industrial revolt 
seemed imminent. Conciliated for the time by the per- 
suasion of Mr. Lloyd George and securing for the most 
part their demands, the South Wales miners returned to 
work. At the end of 1916, however, they again threat- 
ened to strike, and this time the Government, unwilling 
to see necessary supplies imperilled, assumed control of 
the mines, first in South Wales, soon after throughout 
Great Britain. Difficulties with the coal miners thus 
marked the beginning and the conclusion of the second 
industrial period of the war. 

Still other features than the production of munitions, 
the conciliation of labour, and the trouble with the min- 
ers characterize the period. In purchasing clothing and 
leather for the army the War Office soon saw itself faced 
with rising prices due in turn to a precarious supply of 
raw material. In the course of 1916 it decided that the 
wool clip of Great Britain should be acquired and at the 
end of the year bought also the far larger one of Aus- 
tralasia. Purchases of domestic and imported hides, 
though on a more restricted scale, were similarly carried 
through. To secure meat supplies for the army at a 
reasonable price, the Government in the spring of 19 15 
was forced to requisition shipping space on British ves- 
sels plying to Australasia and to the Argentine. It was 
the beginning of the control of merchant shipping 



I 



xu 



INTRODUCTION 



prompted by a desire to influence prices. A similar form 
of control was adopted when, after freight rates for 
wheat had risen immoderately toward the end of 1915, 
the Government diverted ships to the North American 
trade and determined what profits were permissible. By 
the end of 19 1 6 there was little British shipping that had 
not been requisitioned or was not controlled. During 
the same year, also, measures looking toward economy 
in shipping space became necessary and the importation 
of certain bulky commodities was restricted. 

It was toward the end of 1916 that public criticism 
and the exigencies of the shipping situation forced upon 
the Government a policy of still more stringent control 
over many branches of industry. Behind all lay the in- 
creased cost of living. Complaints about this had been 
rife ever since February, 191 5, when the rising prices of 
necessities first became oppressive. In the summer of 
19 1 5 the price of coal at the pit head was limited by statute 
to a certain advance upon pre-war prices. From the be- 
ginning of the war the Government controlled the price 
of sugar, but kept it very high, since there was added to 
a considerable initial cost a heavy war tax. The price 
of wheat and of imported meat had to some extent been 
affected by the Government's control of ocean freights. 
There remained, however, the possibility of fixing max- 
imum prices for essential foodstuffs; and, if it should 
appear that such a policy might discourage the British 
farmer and deter him from production, inducements 
to agriculture might well be offered in compensation. 



INTRODUCTION 



XUl 



Upon this somewhat hazardous policy the Government 
ventured after November, 19 16. At that time the cost 
of the principal articles of food as compared with the 
cost at the beginning of the war had advanced about 80 
per cent. Beginning with a limitation upon the prices 
which might be charged for milk, the Government in the 
course of a twelvemonth fixed maximum prices for the 
most important articles of food. In the case of bread, 
for which a maximum price based upon the cost of im- 
ported wheat would still have worked hardship for a 
large part of the population, a price below cost was 
eventually established. The loss would be made good, 
it was explained, by a subsidy from the exchequer. Con- 
versely, the farmer was encouraged to plough arable 
land for the sowing of grain by the guarantee of mini- 
mum prices for wheat and oats during a series of years. 
Thus with one hand the Government tried to check rising 
costs, while with the other it endeavoured to stimulate 
production. 

The stimulus to production was one method of escape 
from what was to prove an imminent danger of 1917, the 
shortage of ocean tonnage. Much British mercantile 
shipping having been requisitioned from the beginning of 
the war, the activity of submarines more and more made 
serious inroads upon the part that remained. Not only 
was it essential that more food be produced in Great 
Britain, but economy of consumption became imperative. 
In various ways the Government set itself to induce peo- 
ple to save food. Making use of persuasion at first, it 



XIV 



INTRODUCTION 



Stood ready at the end of 19 17 to resort to rationing if 
necessary. Indeed, in the case of sugar, rations were 
imposed at the end of the year. 

Another aspect of the economy forced upon Great 
Britain during the year was the resort of priority schemes. 
Particularly in the apportionment of steel to manufac- 
turers according to the importance of their products from 
the mihtary or national point of view and in the similar 
allocation of wool to spinners were priority rulings in- 
troduced. They were, indeed, a kind of rationing. 
Whereas, however, for consumers of food the rationing 
is impartial, it is the essence of priority rationing to show 
favouritism. Always in the latter the manufacturer of 
civilian implements or stuffs gets least consideration. 
All energies of the nation are concentrated upon the pro- 
duction of what is essential for the war, and other activi- 
ties receive litde consideration. 

The following chapters have been arranged to show as 
far as possible the successive stages of governmental con- 
trol over industry. First to be subjected to it were the 
railways. Munitions works and the labour which op- 
erates them were next with great effort directed toward 
energetic and disciplined production. Coal miners and 
dealers in coal proved more obdurate, forcing the Gov- 
ernment to take over the industry. The administration 
of wool and hides was assumed in order to secure econo- 
mies in government purchasing and to conserve stocks. 
Upon the shipping industry depends the existence of a 
food-importing nation ; and to secure supplies at reason- 



INTRODUCTION XV 

able rates nearly all merchant shipping was eventually 
requisitioned or put under blue-book rates. Finally, in 
the last period of governmental control, food was made 
available for the consumer at maximum prices and pro- 
duction was stimulated by the promise of possible sub- 
sidies to the farmer. 

What may be the permanent significance of this gov- 
ernmental control of industry cannot be foreseen. As- 
surance is given that all measures are temporary and that 
with peace the conditions of peace will be restored. 
What will have been created, however, is precedent and 
experience; and in the industrial world which emerges 
from the war these may have more importance than is at 
the moment anticipated. 



CONTENTS 

CHAPTER PAGE 

I Introduction yii 

II The Railways i 

III Munitions and Labour 14 

IV The Coal Mines 61 

V Wool and Woollens iqi 

VI Hides and Leather 129 

VII Shipping 140 

VIII Food.— Sugar, Meat, and Bread .... 167 

IX Agriculture 249 

X Conclusions and Comparisons .... 269 
Index ^ok 



p. D. C. 
P. D. L. 
Cd. 

D. F. M. 
B. T. J. 
B. T. R. 
L. T. 

L. E. 
M. G. 

E. N. 
A. R. 



ABBREVIATIONS 

Parliamentary Debates, Commons. 

Parliamentary Debates, Lords. 

Paper by Command. 

Defense of the Realm Manual. 

British Trade Journal. 

British Trade Review. 

London Times. 

London Economist. 

Manchester Guardian. 

English Nation. 

Annual Register. 



ti 



WAR TIME CONTROL OF 

INDUSTRY 



i 



i 



f 



THE RAILWAYS 

On August 4, 1914, Great Britain was at war; on 
August 5, His Majesty's Government assumed control of 
the railways of England, Scotland, and Wales. It was 
the prompt, almost instantaneous action of the State to 
secure for itself command of the arteries of traffic. 
Henceforth administration lay with a committee of gen- 
eral railway managers, their chairman the President of 
the Board of Trade. ^ 

In accordance with the Regulation of the Forces Act 
(1871) under which the Government acted, interposition 
involved full compensation to the owners for loss or in- 
jury sustained, the amount of this to be determined by 
agreement or, if necessary, by arbitration. In Septem- 
ber the Board of Trade issued a memorandum announc- 
ing the agreement reached. The Government undertook 
to pay to the companies " the sum by which the aggre- 
gate net receipts for the period during which the Gov- 
ernment are in possession fall short of the aggregate net 

^ H. J. Jennings, Home Railways during the War. Nineteenth 
Century and After. Apr. 1915. 



2 WAR TIME CONTROL OF INDUSTRY 

receipts for the corresponding period of 1913." If, how- 
ever, the net receipts of the companies for the first half 
of 19 1 4 should turn out to be smaller than the net re- 
ceipts for the first half of 19 13, the sum payable should 
be reduced in the same proportion. The Government's 
payment together with the net receipts of all the com- 
panies was to be distributed among them in proportion to 
their several net receipts during the period with which 
comparison was made. The plan in short was the sim- 
ple one of guaranteeing to the railways the profits which 
had prevailed during the immediate past. On the other 
hand, the arrangement covered all special services, such 
as those in connection with military or naval transport, 
rendered to the Government by the companies ; it, there- 
fore, became unnecessary that payments be made for such 
services.^ Not only did the railways pool their net traf- 
fic receipts but to a great extent they pooled their rolling 
stock as well. Arrangements thus made for public ends 
have persisted with slight readjustments during the war. 
Having come to terms with the owners of the railways, 
the Government turned to the men. The railway em- 
ployes of Great Britain are organized in two large 
unions, the National Union of Railwaymen and the As- 
sociated Society of Locomotive Engineers and Firemen. 
It happened that a scheme of conciliation, worked out 
between the unions and the owners at a Board of Trade 
conference on December 11, 191 1, became inoperative 
after November 30, 19 14. The avoidance of readjust- 

2 B, T. J., Sept. 17, 1914, p. 749. 



THE RAILWAYS 3 

ment and possible industrial conflict at the latter date was 
imperative. The unions happily showed themselves 
ready to conclude with the Government in October what 
is known as " the truce." They agreed that the concilia- 
tion scheme of 1911 should remain in force, the men's 
representatives on the existing conciliation boards of each 
of the several railways continuing to act. The railway 
companies or either union might, however, give six 
weeks' notice to terminate the agreement. Otherwise all 
existing contracts and conditions of service should re- 
main operative.^ True to the spirit of the agreement, 
the men showed public spirit, suspended trade union 
regulations, worked hard and overtime. 

The first occasion for a readjustment came early in 
191 5. Owing to the increased cost of living, the men 
asked for an advance of 5 s. per week in their wages. 
The companies ofl^ered less, and the outcome of several 
conferences, supervised and directed by the government, 
was the grant of a war bonus. It was fixed at 3 s. for 
men whose wages were more than 30 s. a week, at 2 s. 
for those whose wages were less.^ Mr. A. Bellamy, 
President of the National Union of Railwaymen, in his 
address at the annual conference of that body, hailed the 
outcome as the " largest and widest agreement ever nego- 
tiated by any union for the benefit of its members in the 
history of the United Kingdom, if not of the world." ^ 

3 P. D. C, Aug. 15, 1917. (L. T., Aug. 16, p. 8). 

* Ibid. 

«L. T., Je. 22, 191 5, p. 5. 



4 WAR TIME CONTROL OF INDUSTRY 

But the triumph was not so much over unwilling em- 
ployers as over an embarrassed government. For it was 
the Government which frankly assumed three-fourths of 
the £4,000,000 added to the wages bill.^ Indirectly it 
assumed the entire sum, although the companies agreed 
to pay 25 per cent, of the increase. This was in return 
for another concession from the Government. The lat- 
ter had, it will be remembered, safeguarded itself in its 
arrangement with the companies against the possibility 
that earnings during the first half of 1914 might be less 
than during the first half of 1913. This contingency de- 
veloped into fact with the publication of balance sheets, 
the northern roads having suffered just before the war 
from a reaction in the iron trade and from inactivity in 
the cotton trade. The Government would have been en- 
titled to reduce its payment to the 1914 basis, i. e., to 
have decreased it by nearly 3 per cent. Instead it stip- 
ulated that the companies pay 25 per cent, of the war 
bonus now promised to the menJ Despite this apparent 
shifting of part of the burden, the meeting, directly or 
indirectly, of this first demand of labour for increased 
wages stood forth in February, 19 15, as one of the first 
fruits of governmental control. 

Demands of the kind naturally did not end early in 
191 5. In September unrest was again manifest and a 
certain section of the National Union of Railwaymen 
urged the termination of " the truce." Eventually, at 

® Jennings, op. cit. 

7 B. T. J., Apr. 22, 1915, pp. 223, 224. 



THE RAILWAYS 5 

a meeting between the executive council of this body 
and the representatives of the companies, the war bonus 
was increased from 3 s. to 5 s. More ominous was the 
discontent of August and September, 19 16. The in- 
creased cost of living had now become oppressive, and 
a further 10 s. advance in the bonus was demanded. If 
the State were compelled to find money for increased 
wages, the men reasoned, it might do something about 
prices. Such sentiments found expression at a general- 
delegate meeting of the National Union at Essex Hall, at 
a demonstration in Hyde Park, at a mass meeting of 
Welshmen at Cardiff. In September the Welshmen 
threatened to stop work unless an advance of wages were 
conceded within a week. The companies on their part 
offered to extend the 5 s. bonus by 3 s. and to refer to 
arbitration the demand for a further advance. The men 
declined the offer. On September 15 the Board of Trade 
intervened, negotiating alternately with the Executive 
Committee of the National Union and the General Man- 
agers of the Railway Companies. Meanwhile at Cardiff 
the men postponed the strike which had been set for Sep- 
tember 17, and by the twentieth an agreement was 
reached. The war bonus for men of eighteen and over 
was advanced from 5 s. to 10 s., for men under eighteen 
from 2 s. 6 d. to 5 s.^ The Government, of course, as 
administrator of the railways, assumed responsibility for 
the increase. Again, in April, 1917, 5 s. was added to 

«A. R., 1916, p. 166. 



4 WAR TIME CONTROL OF INDUSTRY 

But the triumph was not so much over unwilling em- 
ployers as over an embarrassed government. For it was 
the Government which frankly assumed three-fourths of 
the £4,000,000 added to the wages bill.^ Indirectly it 
assumed the entire sum, although the companies agreed 
to pay 25 per cent, of the increase. This was in return 
for another concession from the Government. The lat- 
ter had, it will be remembered, safeguarded itself in its 
arrangement with the companies against the possibility 
that earnings during the first half of 1914 might be less 
than during the first half of 1913. This contingency de- 
veloped into fact with the publication of balance sheets, 
the northern roads having suffered just before the war 
from a reaction in the iron trade and from inactivity in 
the cotton trade. The Government would have been en- 
titled to reduce its payment to the 1914 basis, i. e., to 
have decreased it by nearly 3 per cent. Instead it stip- 
ulated that the companies pay 25 per cent, of the war 
bonus now promised to the men7 Despite this apparent 
shifting of part of the burden, the meeting, directly or 
indirectly, of this first demand of labour for increased 
wages stood forth in February, 1915, as one of the first 
fruits of governmental control. 

Demands of the kind naturally did not end early in 
191 5. In September unrest was again manifest and a 
certain section of the National Union of Railvvaymen 
urged the termination of '' the truce.'* Eventually, at 

6 Jennings, op. cit. 

7 B. T. J., Apr. 22, 1915, pp. 223, 224. 



/ 



THE RAILWAYS 5 

a meeting between the executive council of this body 
and the representatives of the companies, the war bonus 
was increased from 3 s. to 5 s. More ominous was the 
discontent of August and September, 19 16. The in- 
creased cost of living had now become oppressive, and 
a further 10 s. advance in the bonus was demanded. If 
the State were compelled to find money for increased 
wages, the men reasoned, it might do something about 
prices. Such sentiments found expression at a general- 
delegate meeting of the National Union at Essex Hall, at 
a demonstration in Hyde Park, at a mass meeting of 
Welshmen at Cardiff. In September the Welshmen 
threatened to stop work unless an advance of wages were 
conceded within a week. The companies on their part 
offered to extend the 5 s. bonus by 3 s. and to refer to 
arbitration the demand for a further advance. The men 
declined the offer. On September 15 the Board of Trade 
intervened, negotiating alternately with the Executive 
Committee of the National Union and the General Man- 
agers of the Railway Companies. Meanwhile at Cardiff 
the men postponed the strike which had been set for Sep- 
tember 17, and by the twentieth an agreement w^as 
reached. The war bonus for men of eighteen and over 
was advanced from 5 s. to 10 s., for men under eighteen 
from 2 s. 6 d. to 5 s.^ The Government, of course, as 
administrator of the railways, assumed responsibility for 
the increase. Again, in April, 1917, 5 s. was added to 
8 A. R., 1916, p. 166. 



6 WAR TIME CONTROL OF INDUSTRY 

the war bonus, which thus became 15 s. a week.^ Since 
these liberal awards affected some 350,000 men, trade 
union officials could congratulate themselves. 

In August, 19 1 7, new demands on the part of one of 
the unions went beyond the simple question of war 
bonuses. During the summer both unions had made 
fresh proposals to the companies. The response of the 
latter proving satisfactory to the National Union of Rail- 
waymen, a conversion of the war bonus into a war wage 
was accepted, the effect being an increased payment for 
overtime and for Sunday duty, which amounted to some 
£13,000,000 per annum. A like offer was made to the 
Associated Society of Locomotive Engineers and Fire- 
men, who represent about one-half of the drivers and 
firemen and claim a membership of 35,000. This body, 
however, declined to negotiate regarding a wage or bonus 
unless the principle of an eight-hour day was first con- 
ceded. The President of the Board of Trade, Sir Albert 
Stanley, pointed out that the Government could not con- 
sider their proposal, since the question did not arise out 
of war conditions nor could an eight-hour regime pos- 
sibly be adopted during the war. Inasmuch as the pres- 
ent system of control, he added, would continue for some 
time after the war, there would then be an opportunity to 
deal with the question of hours. ^^^ Mr. Thomas, speak- 
ing for the National Union in the House of Commons, 
declared that the 400,000 men whom it represented knew 

» L. T., Aug. 20, 1917, p. 7. 

10 P. D. C, Aug. 15, 1917 (L. T, Aug. 16, p. 8). 



THE RAILWAYS 7 

nothing officially of the threatened strike and were not 
concerned in it.^^ Elsewhere he explained that while he 
was in favour of an eight-hour day for all railwaymen, 
this movement of the smaller union aimed at the securing 
of special privileges for a single group. Nor was it a 
genuine eight-hour-day movement, since there was every 
expectation of working overtime and receiving therefor 
additional wages. Above all, the demand was in con- 
travention of the truce made by labour at the beginning 
of the war to the effect that no pre-war question of dis- 
pute should be brought forward during the continuance 
of hostilities.^2 

None the less the engineers and firemen persisted. On 
Friday, August 17, a meeting of delegates threatened a 
strike unless the Government within twenty-four hours 
conceded their demands. Next day Sir Albert Stanley and 
Mr. George Barnes endeavoured unsuccessfully to dis- 
suade them. The hour for the strike was left to the de- 
cision of the executive committee, and at the conclusion 
of the meeting the younger members lustily sang " The 
Red Flag.'' The Government at the same time issued a 
proclamation applying the Munitions of War Act, which 
declared a strike illegal until resort had been had to the 
arbitration of the Minister of Labour. ^^ 

Signs of dissent meanwhile appeared within the union. 
At Plymouth a branch signified that it would not obey an 

" Ibid. 

" L. T., Aug. 20, 1917, pp. 7, 8. 

" Ibid. 



8 



WAR TIME CONTROL OF INDUSTRY 



order to strike. Responsible members declared that the 
extreme Socialist element was not strong, being confined 
chiefly to South Wales. On Monday wiser counsels pre- 
vailed at London. Conferences between the executive 
committee of the union and the Board of Trade were 
resumed, and in due course an agreement was reached. 
The strike was declared off, while Sir Arthur Stanley 
renewed and slightly extended the pledge which he had 
offered to the delegates on Saturday. After the war the 
Government would continue the control of railways for a 
time, and within one month would afford an opportunity 
for the bringing forward of a request for a shorter work- 
ing day. Any reasonable request would have the im- 
mediate and sympathetic consideration of the Govern- 
ment. During the war the Railway Executive Com- 
mittee would reduce hours so far as possible, and future 
demands for wages would be dealt with as liberally as 
demands in the past had been.^'* With this somewhat 
generous concession on the part of the Government the 
unrest of the railway men was for the time quieted 
and the machinery of state control once more moved 
smoothly. 

In its dealings with the railways, the Government's 
prime concern, apart from the problem of labour, was 
economy in the employment of staff and rolling stock. 
Added to the normal demands upon the home railways 
was the enormous task of transporting troops and ma- 
terials of war. Since these claims of course took pre- 

1* Ibid., Aug. 22, p. 6. 



THE RAILV^AYS 9 

cadence, the result was the frequent delay of civilian 
freight, especially food. Congestion at the docks be- 
came a persistent evil and the increased cost of living 
was at times and in part traceable to the overtaxed trans- 
portation system. 

At the end of November, 1916, the Board of Trade, 
preparing to be mandatory, resorted to exhortation. 
Pointing to the increased demands upon the railways, 
they noted that civilian traffic had diminished little and 
urged that each prospective traveller ought henceforth 
to ask himself whether his journey was necessary. 
Should matters not improve, the Government, however 
reluctantly, would have to interfere. Upon traders the 
Board wished to impress the importance of avoiding de- 
lays both in loading and unloading wagons. The saving 
of a day by all shippers would mean a substantial ad- 
dition to the rolling stock of the country. Commendable, 
too, was economy in the use of sheets for covering 
wagons.'^ 

With this admonition the Government, after a fort- 
night, proceeded to amend the Defense of the Realm Act 
by Regulation 7 B. This conferred upon the Board of 
Trade extensive powers. They might henceforth take 
possession of any private owner's wagons on making 
due compensation; they might enforce prompt loading 
or unloading of wagons ; they might curtail statutory re- 
quirements as to the running of trains and the stopping 
at stations ; they might restrict or prohibit certain classes 

15 B. T. J., Nov. 30, 1916, p. 656. 



lO 



WAR TIME CONTROL OF INDUSTRY 



) 



of traffic, including passengers' luggage; they might 
modify statutory requirements with respect to maximum 
fares foi passengers. ^^ 

Luggage and fares were the Board's first objective. 
Two Orders in Council of December 31, 1916, provided 
respectively that luggage carried should not exceed 100 
pounds for each passenger and that after January i, 
19 1 7, the companies might charge in addition to existent 
fares a sum equal to one-half of such fares.^^ The com- 
panies, acting promptly, made new schedules effective 
with the new year. Passenger trains became fewer, 
slower, and longer. Through carriages attached to main 
line trains were decreased in number, passengers had to 
change oftener. Through traffic between districts was, 
so far as possible, concentrated on one line. On local 
services, although morning and evening trains were not 
greatly changed, others were removed. Reserva- 
tion of compartments and seats was discontinued, the 
number of restaurant and sleeping cars curtailed. The 
London and North Western on its system cancelled 500 
trains and shut down 44 stations. ^^ Such changes, to- 
gether with the 50 per cent, increase in fares, were ex- 
pected to do away with mere travelling for pleasure. 

Hostile criticism was directed not so much against the 
imposition of restrictions as against their character. 
Surely it was said,^^ the first thing to do was to cut off 

16 Ibid., Dec. 21, igi6, p. 865 (Order in Council, Dec. 13, 1916). 

" D. R. M., 4th ed., p. 360. 

18 M. G., Dec. 28, 29, 1916; L. T., Jan. i, 1917, p. 5. 

" E. N., Jan. 6. 1917, p. 487; P. D. C, 1916, LXXXVIII, 1818, 1846. 



) 



THE RAILWAYS jj 

luxuries and of these the most conspicuous were first-class 
carriages. To retain them while raising fares by 50 
per cent, was a discrimination against wage earners and 
poor people. To which it could only be said in reply 
that workmen's, season, traders', and zone tickets were 
not subject to the increase. The Government, far from 
hampenng the movements of people like munitions work- 
ers, was doing what it could to facilitate them. 

Two more orders under the new regulation, issued on 
March 16, looked toward economy in the use of freight 
wagons. If a wagon was not unloaded by a trader within 
a specified time (two days at inland stations, three days at 
ports, always excluding the day of arrival or receipt of 
notice), the railway company might cause the wagon to be 
unloaded and its contents stored at the owner's risk all 
expenses to be paid by the trader. For loading, one day 
was allowed, although two days might be taken in Scot- 
land should the freight be coal. The order was not ap- 
plicable to the coal traffic of England and Wales If 
the second order provided, a private owner's wagon 
would otherwise be sent on a journey empty, the Board 
of Trade might take possession of the wagon for that 
journey, giving such directions for loading as they 
thought fit and recompensing the owner for its use.^o 
With these orders the policy of economy, foreshadowed 
m the new regulations of December, was put into more 
extended operation. 

Soon after there was outlined a plan for attain- 

20 D. R. M., 4th ed., pp. 364, 367; B. T. J., Mar. 29, 1917. 



12 



WAR TIME CONTROL OF INDUSTRY 



THE RAILWAYS 



13 



t 



ing economy in the transportation of coal. The Con- 
troller of Coal Mines officially called attention to the sav- 
ing of haulage which would result if all possible descrip- 
tions of coal were purchased from collieries situated as 
near as possible to the points where the coal in question 
was to be consumed. ^^ By July he had worked out a 
scheme which, from September 10, 1917, would make 
compulsory the saving indicated. For purposes of trans- 
portation, Great Britain was divided into twenty areas 
indicated on widely distributed maps prepared for the 
Controller by the railway clearing house. Between 
these areas transportation was to take place in accordance 
with certain principles. Consumption should be as near 
the producing point as possible ; in consequence, coal pro- 
duced and consumed within one area would be ignored, 
and an area producing less coal than sufficed for its own 
needs should not send its product to other areas. Coal 
passing from one area to another should follow main 
trunk lines, since these had superior facilities, and should, 
as far as possible, move in such well defined directions as 
north to south, north to south-east, north to south-west, 
east to west. In pursuance of this end the map indicated 
by straight lines and arrows the approved movements. 
London and its environs, for instance, form one area, and 
converging lines from midland, northern, or western dis- 
tricts show whence it may most economically draw its 
supply. 

In carrying out the scheme, factors, merchants, and di- 

21 B. T. J., Mar. 15, 1917, P- 725- 



rect consumers were not asked to take any initiative. 
District Coal and Coke Committees, acting for the Con- 
troller of Coal Mines, assumed administrative powers. 
Every colliery owner, on receiving instructions from the 
Committee in whose area his colliery is situated, was re- 
quired to inform the Committee of his sales of coal and 
of the place or region supplied by the purchaser. The 
Committee in due course informed him what supplies 
were to be diverted elsewhere after September 10, 1917, 
and it then became his duty to make this known to the 
merchants and factors affected. By these seemingly sim- 
pie arrangements, 700 million ton-miles, it was estimated, 
would be saved annually.22 

In its administration of the railways the Government 
has been perhaps more fortunate than in any other of its 
essays in state control. Acting promptly, it met with no 
opposition from the owners, and the terms on which it 
acquired possession cannot be called unfavourable; the 
successive demands made by the men have led to no very 
serious deadlocks, owing perhaps to the highly concilia- 
tory attitude which the Government in each instance even- 
tually adopted; economies in traffic have since the end of 
19 16 been secured and this without serious inconvenience 
to the public. The record is undramatic and enviable, 
especially when compared with the crises and discontent 
which marked the advent of government control in other 
industries. 

22 L. T., Jy. 7, 1917, p. 7; U. S. Chamber of Commerce, War Bulle- 
tm No. 10, Aug. 3, 1917. 



MUNITIONS AND LABOUR 

During the first half of 19 15 events abroad and at 
home made clear to British statesmen that all was not 
well either in the trenches or in the workshops. The 
battle of Neuve Chapelle disclosed British inferiority in 
guns and shells; a series of strikes announced growing 
industrial unrest. Obviously the two situations reacted 
upon each other. The production of munitions could not 
be increased so long as the producers were indifferent or 
rebellious; and, on the other hand, the continuance of the 
war tended to increase the cost of living, the burden of 
which fell most heavily on the workers and was passion- 
ately resented by them. For they reasoned that the in- 
crease was unwarranted, and due to " profiteering '' by 
capitalists and middlemen. Such exploitation the Gov- 
ernment could prevent if it would; and prevent it the 
Government must. The double task of His Majesty's 
ministers in 1915, therefore, was to increase greatly the 
output of munitions of war and to arouse labour by an 
appeal to its patriotism, while conciliating it by a limita- 
tion of employers' profits. 

At the outbreak of the war the government munition 
plants for the army (Woolwich Arsenal, Enfield, and 
others) were far from being in the state of readiness 
which characterized the navy's dockyards. Nor were 

14 



MUNITIONS AND LABOUR 



IS 



private armament firms better off. Particularly was 
there a shortage of machine tools, habitually got by both 
England and France in large measure from America. 
Although any one can make shells, only skilled workmen 
can produce tools. In the case of both the belligerents 
and the United States there was, therefore, a period of 
delay before the equipment for turning out munitions on 
a large scale could be installed. 

Already in October, 19 14, Great Britain began to take 
stock of the military and industrial situation. The old 
assumption of the Committee of Imperial Defence that 
an expeditionary force should not exceed six divisions 
had been discredited and preparations were on foot to 
send many times this number of soldiers to France. Not 
only were munitions needed on an unprecedented scale, 
but the character of them had to be changed. High ex- 
plosive shells were proving more important than shrap- 
nel. " I do not know," said Mr. Lloyd George, " that 
we have got to change the whole of our machinery, but 
at any rate it makes a vast difference to change the actual 
character of your ammunition in the midst of a war and 
begin afresh." ^ A report was got from France and, 
following French example, the larger armament firms 
introduced a system of sub-contracting. Larger and 
more experienced plants retained in their hands the dif- 
ficult processes and the putting together of parts, exercis- 
ing likewise supervision over the less experienced estab- 
lishments. Before mid-spring of 191 5 the Government, 

1 P. D. C, 1915, LXXI, 314. 



m 



i6 



WAR TIME CONTROL OF INDUSTRY 



either by direct contract or by sub-contract, employed 
between 2500 and 3000 firms. The War Office and a 
Cabinet Committee made arrangements by which men 
from engineering works went to armament firms for some 
six weeks while their own shops were being adapted ; and 
the knowledge acquired was in turn valuable in carrying 
out the adaptation. If 20 be taken as representing the 
output of artillery ammunition in September, 19 14, the 
output of succeeding months was : October 90, Novem- 
ber 90 (since new machines had not yet come into opera- 
tion), December 156, January 186, February 256, March 
3S8. By April the Government was free from anxiety 
regarding munitions and could largely supply its allies. 
Lord Moulton in particular had done much to increase 
the supply of high explosives.^ 

In December, 19 14, however, it had been discovered 
that contractors were likely to be late in fulfilling their 
orders owing to lack of labour. Efforts were then made 
through labour exchanges to transfer workers to arma- 
ment works. At first a considerable number of men 
came, but during February, 191 5, fewer, and by March 
it was clear that deficiencies could not thus be made up.^ 
The Government consequently adopted a " second best 
course." On March 9, Mr. Lloyd George introduced 
the Defence of the Realm Bill, the cornerstone upon 
which was to be reared an elaborate structure of state 
control. The immediate purpose of the measure was to 

3 IVh" ^^' '^""^^'^' ^P^^^^ ""^ ^''- ^^°>^^ ^^^''^e* Apr. 21, 1915. 



MUNITIONS AND LABOUR 



17 



enable the Government, i. e. the War Office and the Ad- 
miralty, to take over such private engineering works as 
would insure supplies for the future. Already they had 
power to take over works in which war material was be- 
ing produced, but these were insufficient. No trouble 
with the owners was anticipated — indeed, the bill was 
expected to enable owners to get out of difficulties when 
they were asked to throw everything into the common 
stock. Mr. Bonar Law said that the Government might 
have had these powers six months earlier. The debate 
turned upon the compensation to be made and a com- 
mission to consider this was promised.^ 

In March, 19 15, however, the owners of possible muni- 
tions plants were not the group most threatening to the 
mobilization of industry. Events were proving that it 
was quite as important and far more difficult to conciliate 
the workers in munitions and shipbuilding establishments. 
The unrestricted enlistment of skilled operatives had to 
a considerable extent impaired productive capacity; and 
this tendency was intensified by the behaviour of the 
men who stayed at home. Instead of working harder 
than in normal times, many of them took advantage of 
their increased earnings to indulge in idleness, amuse- 
ment, and drink. 

So serious had the situation become by February 4, 

19 1 5, that the Government appointed a Committee on 

Production. It was to report measures which might 

" ensure that the productive power of the employes in 

* Ibid., LXX, 1271. 



i8 



WAR TIME CONTROL OF INDUSTRY 



engineering and shipbuilding establishments working for 
Government purposes shall be made fully available." 
This Committee, consisting of Sir George Askwith, Sir 
Francis Hapgood, and Sir George Gibb, recommended 
that no stoppage of work by strike or lockout should take 
place in such establishments and that there should be set 
up an impartial tribunal to investigate and settle disputes. 
Deferring the compulsory element in these recommenda- 
tions, the Government appointed the Committee itself a 
court of voluntary arbitration.^ 

Before long it had plenty to do. The number of 
strikes was rapidly increasing with the progress of the 
new year. Until then the efforts of the three committees 
which controlled trade unions had had highly satisfactory 
results. Of the lOO strikes in progress at the beginning 
of the war only 20 were unsettled at the end of August, 
1 9 14, and the number had been reduced to 10 by January 
I. In February, however, industrial unrest, induced 
largely by the increased cost of food, resulted in 47 
fresh disputes which involved stoppage of work. During 
March there .were 74 others, during April 44, and during 

May 63.^ 

The first serious strike of 191 5 was that of the en- 
gineers on the Clyde, beginning on February 16. In some 
parts of Glasgow rents had risen 10 per cent., and in 
general foodstuffs w^ere costing from 20 to 25 per cent. 

5 p. Alclen, Labour Unrest and the War, Contemporary Review, 
August, 1915. 

6 P. D. C, 1915, LXXII, 1572-3. 



MUNITIONS AND LABOUR 



19 



more than before the war. The men were feeling the 
strain of the winter's work and they saw their employers 
reaping large profits. They asked, therefore, for an in- 
crease in wages of 2 d. the hour. When the companies 
offered only % d., some 10,000 men resolved to strike. 
In this they disregarded the advice of their trade union 
executive, following instead obscure leaders of Syndi- 
calist tendencies. The Government intimated that w^ork 
must be resumed, promising that representatives of the 
men should meet the newly appointed Committee on 
Production and arrange for arbitration. The meeting 
was set for March 8, the strike committee meanwhile 
on March 4 recommending a return to work, which forth- 
with took place. But the men declared that if they did 
not eventually receive the 2d. demanded they would 
adopt the policy of " ca' canny," i. e. remain at work but 
do as little as possible. The arbitration of the Commit- 
tee on Production was duly accepted. Its award, how- 
ever, made known on March 24, disappointed the men, 
since an advance of only i d. an hour (or 10 per cent, on 
piece work) was granted. Thereupon they kept their 
word, although the fact was not generally known.^ 

The Committee meanwhile made three reports. Time 
available for production was being lost through absen- 
teeism, through stoppages by strikes and lockouts, 
through "demarcation" disputes between unions about 
the allocation of work, and through trade union restric- 

7 A. R., 1915, p. 86; Alden, op. cit. ; A. Shadwell, The Industrial 
Factor in the War, Nineteenth Century and After, Aug., 1915. 



20 



WAR TIME CONTROL OF INDUSTRY 



MUNITIONS AND LABOUR 



21 



tions, which among other things prevented the employ- 
ment of semi-skilled, unskilled, and female labour. The 
suspension of these restrictions was recommended. 

To meet the situation, representatives of thirty-five 
trade unions were summoned to an interview on March 
17 with the Chancellor of the Exchequer and the Presi- 
dent of the Board of Trade, -the so-called Treasury Con- 
ference. Mr. Lloyd George, after demonstrating the 
need of munitions, announced that the Government in- 
tended to limit the profits of emplpyers. To the unions 
he proposed that during the war all restrictions on output 
should be suspended and that no strikes should take place 
on Government work, any dispute to be settled by an 
impartial tribunal nominated by the Government. At the 
conclusion of the conference on March 20 these proposals 
were embodied in a memorandum which the representa- 
tives of the unions agreed to recommend to their fellow 
members. Trade union practices should be relaxed, but 
neither this nor the admission of semi-skilled or female 
labour should affect adversely the rates customarily paid 
for work. Disputes over wages or conditions were 
henceforth to be discussed in a conference between em- 
ployers and employed; if agreement should prove unat- 
tainable, the matter should be submitted to the Committee 
on Production, or to a single arbitrator agreed upon by 
both parties or appointed by the Board, or, finally, to a 
Court of Arbitration upon which employers and men 
should be equally represented.^ 

8 P. D. C, 1915, LXXII, 1573; L. T., Mar. 20, 1915, p. 11. 



This memorandum did not have the wide acceptance 
hoped for, although it was by no means disregarded. In 
April there were fewer strikes, and a number of impor- 
tant disputes were referred to the Committee on Produc- 
tion. This body, transformed into a court of arbitration, 
showed a tendency to compromise by fixing wages at a 
figure half way between the demands of the men and the 
offer of the employers. For the rest, trade union prac- 
tices were relaxed only in certain trades and localities — 
not elsewhere. The men were disinclined to follow the 
lead of their official representatives, nor was there any 
compulsion which could be brought to bear upon them. 
If employers discharged them, other jobs were waiting 
on every hand. In some districts the situation became 
worse than before.^ 

Scarcely had the memorandum been published when a 
strike of dock labourers at Liverpool and Birkenhead 
caused the Government serious concern and was ended 
only by a semi-military device. The dispute had to do 
with over-work at week-ends and payment for it. Despite 
an admonitory letter on March 21 from Lord Kitchener 
and a patriotic appeal on March 30 from Mr. James Sex- 
ton, one of their leaders, the men were obdurate. To 
carry out government work at the port, a Dockers' Battal- 
ion was formed during the first week in April under the 
command of Lord Derby. These civilian soldiers, liable 
to home service only, were subject to military law and re- 
ceived both civil and military pay with a guarantee to 

»P. D. C, 1915, LXII, 1573-79; L. T., Je. i, 1915, p. 5. 



22 



WAR TIME CONTROL OF INDUSTRY 



each man of a minimum wage of 42 s. a week. Mem- 
bership was Hmited to the Dockers' Union, and trade 
union rules prevailed. On April 12 the battalion was 
inaugurated, Lord Derby reviewing the 350 men who 
had enrolled. At the same time the brief strike of 
dockers at Birkenhead came to an end.^^ 

During April and May the Government gave much at- 
tention to the drink question. On March 29 a deputation 
from leading ship-building firms, received by the Chan- 
cellor of the Exchequer and the Secretary for Scotland, 
declared with conviction born of long experience that 80 
per cent, of the current avoidable loss of time was due to 
drmk. Mr. Lloyd George summarily described the sit- 
uation : " We are fighting Germany, Austria and Drink ; 
and so far as I can see the greatest of these deadly foes 
IS Drink." The effect of example was tried. On April 
6 it was announced that by the King's command no wines, 
spirits, or beer would henceforth be consumed in any of 
His Majesty's households. Lord Kitchener made a like 
renunciation. The Government, making inquiries, found 
that the mischief-making liquors were spirits and the in- 
ferior but more potent kinds of beer. After Easter pro- 
posals of a highly restrictive nature were brought before 
the House of Commons. Taxes on liquors were to be 
much increased, a greater dilution permitted, and public 
houses in certain areas were to be closed. Opposition 
arose particularly from the Nationalists, who deplored 
the injury which would be done to a great Irish industry 
i^A. R, 1915, pp. 88, 91. 



MUNITIONS AND LABOUR 



23 



and threatened to use all constitutional means to defeat 
the bill. Learning of this Mr. Lloyd George met a depu- 
tation of '' the trade " to arrange a compromise. The 
taxes were withdrawn and it was agreed that the sale of 
spirits less than three years old should be prohibited and 
that existent stores should be put in bond. With this 
somewhat slight result, the agitation died down and the 
subject dropped from discussion. ^^ 

The proposed bill had been, of course, symptomatic of 
the concern with which the Government regarded the 
military and industrial situation. By the middle of May 
it was clear that the measures taken in March had not 
been adequate. Especially was labour still unconciliated, 
feeling that employers' profits had not yet been restricted. 
A political and administrative change now marked the 
initiation of a new endeavour to increase productivity. 
On May 19 it was announced that a Coalition Govern- 
ment would be formed and, when the House met on June 
3, the composition of it was complete. Twelve Liberals, 
eight Unionists, one Labour member, and Lord Kitchener 
assumed the administration affairs. ^^ 

That arm of the new Government which was to grapple 
with the industrial situation was, like the Coalition, an 
innovation. Mr. Lloyd George was to become Minister 
of Munitions, and a bill passed by Parliament to estab- 
lish the ministry received royal assent on June 9. Dur- 
ing the discussion in the upper house, Lord Stanhope, 

11 Ibid., pp. 90, 97, 98, 103. 

12 P. D. C, 1915, LXXI, 2392. 



24 



WAR TIME CONTROL OF INDUSTRY 



about to return to the front next day, described the sit- 
uation. " I am stating nothing that every German staff 
officer does not know when I say that, speaking broadly, 
the French hold their trenches by a few rifles and the 
support of their wonderful 75 mm. guns; while we hold 
our trenches, broadly, by rifle fire. The French system 
is expensive in ammunition; ours is expensive in life." 
He added that a man who refused to do his duty in the 

workshop should be sent to fight whether he liked it or 
not.i3 

This application of compulsory measures to labour 
came up for debate in the House and was subject to sharp 
criticism. It was said that the new Minister was being 
given power to tyrannize over the working classes, to 
conscript labour, to impose slavery on the country. Sir 
John Simon, in charge of the Bill, replied that, if special 
powers were needed in respect to labour, they would be 
asked for from the House. Next day an amendment 
was accepted, declaring that the Minister of Munitions 
would have no power to impose penalties upon workmen 
for doing what they had hitherto been entided to do.^* 

Mr. Lloyd George entered upon the duties of his new 
office with great energy. On June 10 he received repre- 
sentatives of twenty-two trade union organizations. On 
June II and 12 he made important speeches at Cardiff 
and Bristol. By June 2^ he was introducing in the 
House a great legislative measure to mobilize industry, 

13 p. D. L, 1915, XIX, 36. 

i*P. D. C, 1915, LXXII, 107-115. 210. 



MUNITIONS AND LABOUR 



25 



and by July 3 this bill had become law. His exposition 
of the situation and his plans for improving it were as 
follows. 

The Central Powers were turning out shells at the rate 
of 250,000 per day. The pouring of 200,000 shells with- 
in an hour upon Przemysl had driven the Russians out 
of that fortress. Germany's victories thus far were due 
to the organization of her workshops, and ultimate vic- 
tory or defeat would depend upon the supply of muni- 
tions. In the production of munitions France was crip- 
pled, since 70 per cent, of her steel plants were in the 
hands of the enemy. Not only had Germany accumu- 
lated great stores beforehand, but she had mobilized all 
her industries since the war. Most marked was her supe- 
riority in heavy guns, in high explosives, in rifles, above 
all in machine guns. The last had proved to be about the 
most formidable weapon of the war, almost superseding 
the rifle. But, alas, to construct machinery for making 
them required eight or nine months. The history of ten 
months of trench warfare, which the Germans had cor- 
recdy anticipated, was the defence of one's own trenches 
with machine guns while battering one's enemies' trenches 
with heavy guns and high explosives. 

To meet the twenty-five fold expansion in its activi- 
ties,^^ Mr. Lloyd George continued, the War Office first 
resorted to the existing armament firms and had them is- 
sue sub-contracts. The method, however, had not resulted 

15 The expenditure of the War Office in time of peace has been 
£28 million but within ten months had increased to £700 million. 



26 



WAR TIME CONTROL OF INDUSTRY 



in the greatest possible productivity, since the firms had 
not been able to control the subsidiary staffs. A district 
which he had recently visited produced under sub-con- 
tracting some 10,000 shells a month, but under his new 
arrangements at once accepted orders for 150,000 shells 
a month and would in time double even this output. 
Areas seemingly unpromising could do much. Showing 
to the House a fuse for the highest explosive, requiring 
in its making 100 gauges, the Minister of Munitions de- 
clared that London could make such delicate parts. 

The first requisite was to find the organizer, the man 
who could make best use of the expert. Many business 
men of this type the Ministry had secured, men who 
would be asked to organize the Central Office and the re- 
sources of various localities, while, as a Central Advisory 
Committee, they would assist in dealings with other busi- 
ness men. To each of these men would be given his 
special field — to one metals, to another machinery, to 
another explosives, to another labour, and the like. The 
country had been divided into ten munitions areas, each 
under local business men formed into committees of man- 
agement. In the centre of each area representatives of 
the Ministry of Munitions would have headquarters 
where specifications, samples, etc., would be available. 
Although every opportunity had already been given to 
British engineers to go through government arsenals or 
through arsenals of the Elswick Co., of Vickers and 
Maxims, of Beardmores and the rest, the same facilities 
ought to be available in every district, where advantage 



MUNITIONS AND LABOUR 



27 



might be taken of them without loss of time. Associated 
with every local Committee would be an expert engineer 
and representatives of the Admiralty and the War Of- 
fice.^^ 

In his Cardiff speech Mr. Lloyd George outlined the 
three possible methods of utilizing private engineering 
plants. In any area, from one to three existing works 
might be converted into national factories directed to- 
ward nothing but the production of shot and shell. Since 
new machinery was difficult to get, machinery from the 
various shops throughout the district would have to be 
requisitioned to fit out these new arsenals. Leeds and 
two or three other centres in Yorkshire had proceeded 
thus. Lancashire preferred a more individualistic 
method, the one adopted in France with great success. 
Each workshop there estimated its own capabilities and 
added such machinery, especially gauges, as would en- 
able It to turn out some type of munitions. A third 
methcfd combined the other two. Two or three works 
might be converted into a kind of national arsenal, which 
would then serve as finishing plant while the others did 
preparatory work. This was feasible in South Wales 
War ^Munitions Committees, like the one first constituted 
at Newcastle-upon-Tyne, should decide which method 
was preferable for each district. To engineering firms 
that offered to convert their works, but objected to trade 
rivals getting their business, assurance was given that 
there should be equality of sacrifice.^^ 

i«P. D. C, 1915, LXXII. 1 183-1206. 
17 L. T., Je. 12, 1915, p. 8. 



28 



WAR TIME CONTROL OF INDUSTRY 



Although materials of certain sorts were abundant 
enough, others had to be husbanded. The latter must 
not be wasted on non-essential work or the Government 
might be ultimately compelled to take control of the 
market. That the Ministry might be regularly and ac- 
curately informed about the stocks of raw or semi-manu- 
factured metal in the country, it would ask for monthly 
returns. There were unfortunately indications that in 
certain quarters supplies were being held for higher 
prices. Such action caused serious delay and must be 
stopped. ^^ 

From the question of enlisting private engineering 
firms in the business of munitions making, Mr. Lloyd 
George turned to the problem of labour. For this had 
led him to introduce the new bill. Were he able to fur- 
nish skilled workmen, the supply of machine guns could 
be doubled in a few days. A Midland firm could greatly 
have increased its output had it only been able to set up 
idle machinery; but it could not find seventy five mill- 
wrights to perform this task. One remedy was to get 
such engineers as could be had back from the front. The 
ministry had issued a circular to engineering firms asking 
for the names of men who had left them for the war. 
Lord Kitchener had instructed his Adjutant General to 
invite such men to return to works turning out munitions 
of war. Some^men were unwilling to come back and 
some had unfortunately been sent to India, but the War 
Office would do what it could. ^® 

18 p. D. C, 1915, loc. cit. 
" Ibid. 



MUNITIONS AND LABOUR 



29 



As to men who were still at home, difficulties arose 
from their readily leaving one job for another. Em- 
ployers were ready to outbid one another or to accept 
discharged employes; but without control over their 
workmen, they found that they could not prevent slack- 
ness or attain a maximum output. What would be most 
valuable, however, was an increased supply of labour and 
to this end trade union regulations should be relaxed. 
Although in France there were great trade unions and 
the organizer of the munitions supply was a young So- 
cialist, the employment of women and unskilled labour- 
ers had already been permitted. Fuse making was done 
there by female, labour. At home a Bristol firm had re- 
ported that, if it could eke out skilled labour by unskilled, 
it could put a night shift on its machinery and double 
its output. If union rules should be suspended, the na- 
tion, on its part, must give a pledge that the suspension 
would be temporary and that the safeguards which the 
unions had with such difficulty acquired would be re- 
stored. 

Lastly, there ought to be no strikes. Mr. Lloyd George 
admitted that he would like to see compulsory arbitra- 
tion of disputes during the war and still hoped to get 
it. As things stood, although the cotton operatives and 
the miners stood out, the men who turn out munitions 
and ships had assented to such a measure. This had 
been the outcome of the March conference with the 
thirty-five trade unions and of other conferences held 
since then.^^ 

20 Ibid. 



30 



WAR TIME CONTROL OF INDUSTRY 



Thus prepared for and introduced, the Munitions of 
War Act, 191 5, met with Httle opposition in ParHament. 
Carrying to fulfilment the principle embodied in the De- 
fense of the Realm Act, the principle that the Govern- 
ment may assume control of any private works which 
it needs for the manufacture of munitions, the new Act 
was perhaps the most decisive step in state control of 
industry taken during the war. The Minister of Muni- 
tions, it provides, may declare " controlled " any estab- 
lishment in which munitions work is carried on. Such 
declaration, as affecting the owner, limits the profit which 
he may enjoy. His net profit may exceed the standard 
unit by only one-fifth, and the standard unit is the aver- 
age amount of his net profit during the two correspond- 
ing periods before the outbreak of the war. After the 
war, priority in employment in any establishment will be 
given to workmen who have been with the Colours and 
to those employed when the establishment became con- 
trolled. No change in rules or customs made during the 
war shall prejudice the position of the trade unions in 
regard to the resumption of such rules and customs after 
the war. Notice of any change in working conditions 
shall be given to the workmen, who, in turn, may request 
an opportunity for local consultation. The introduction 
of semi-skilled and female labour shall not affect the 
wages paid for any kind of work, and the workers so 
introduced shall receive the wages customary in the dis- 
trict for the class of work in question. Record of all 
changes shall be kept and shall be open to inspection by 



MUNITIONS AND LABOUR 



31 






the Government. Sucti were the regulations imposed 
upon the employer. 

Regarding the workmen, the Act embodies provisions 
tending to apply the restrictions suggested by Mr. Lloyd 
George in his speeches. Any person whose last employ- 
ment has been on munitions shall not be engaged by an 
employer unless he holds a " leaving certificate " from his 
last employer or from a munitions tribunal. This was 
to remedy the "pilfering" of workmen. No lockout 
further, shall be declared by an employer and no em- 
ploye shall take part in a strike. Instead, any difference 
shall be referred for arbitration to any one of the three 
tribunals recognized in the March agreement, viz., the 
Committee on Production, a single arbitrator agreed upon 
by the parties or appointed by the Board, or, in the third 
place, a Court of Arbitration, composed equally of repre- 
sentatives of employers and of employes, its chairman 
appomted by the Board of Trade. The choice of tribunal 
shall lie with the parties or, in default of agreement 
w,th the Board of Trade.^' To conciliate the miners 
and the cotton operatives, who objected to this provision 
for compulsory arbitration in the bill, an amendment was 
accepted, providing that, if the Minister of Munitions was 
satisfied that means existed in any industry for settling 
a dispute affecting work other than work on munitions, 
no proclamation should be made in reference to the dis- 
pute. 

No.' ^09^' •''• ^- '^'^' "■ '"= ^- ^- ^- ^°'- "'■■' P"'- P^P". '915, 



32 



WAR TIME CONTROL OF INDUSTRY 




While the bill was debated in Parliament and while it 
seemed that the inadequate supply of labour might lead 
to the institution of some form of compulsion other than 
the bill provided for, the trade unions asked for seven 
days in which to act. They proposed to secure by vol- 
untary enlistment a mobile corps of munitions workers. 
With each volunteer the Government was to enter into a 
contract providing that he be employed where needed and 
as needed and stipulating that there be no bad time or 
other slackness. Cases of violation should come before 
a Munitions Court consisting of an employer, a trade 
union representative, and a president appointed by the 
Government. If the volunteer could satisfy the enrolling 
bureau that he was a skilled engineer (for engineers 
were the class to be reached), he was to receive a pocket 
certificate which stated over the signature of the Minister 
of Munitions that he was *' enrolled as a War Munitions 
Volunteer in the service of King and country." ^^ 

The Government readily put its machinery at the serv- 
ice of the unions in this matter, and i8o town halls were 
turned into recruiting offices. During the first week 46,' 
000 men were enrolled and eventually the number was 
raised to almost 100,000. In as much, however, as about 
four-fifths of the volunteers were already engaged on 
Government work, the recruits actually available for the 
new munitions program were scarcely adequate. ^^ It 
would clearly be necessary to rely upon the dilution of 

22 L. T., Je. 24, 1915, p. 10; Je. 25, p. 9. 

23 Ibid., Jy. 3. A. R., 1915, p. 147- 



MUNITIONS AND LABOUR 



33 



labour promised by the leaders of the thirty-five unions 
at the Treasury Conference in March. 

In two speeches, one made before the Trade Union 
Congress at Bristol, and one delivered in Parliament, 
Mr. Lloyd George summarized the situation at the end 
of the summer of 191 5.-* Sixteen national factories or 
arsenals had been set up and, as the result of a conference 
with French military authorities, eleven more were to 
be. To secure the supply of machine tools required, es- 
pecially for shells of heavy calibre, all the great machine- 
tool makers had agreed to come under government con- 
trol. For the new arsenals 80,000 more skilled men and 
200,000 more unskilled were needed. The country was 
not yet doing its utmost. Only 15 per cent, of the ma- 
chines for turning out rifles, cannon, and shells were 
working at night. Trade union practices were reducing 
the output of munitions by 25 per cent. Although the 
Government had kept its promise to appropriate war 
profits, the unions had not carried out their part of the 
Treasury Conference bargain. In many arsenals and 
shops semi-skilled men were prevented from doing work 
hitherto done by skilled, the engagement of women was 
vetoed, and hard work was discouraged. 

Although Mr. Lloyd George's charges at Bristol pro- 
duced a great effect upon the Congress, he found it nec- 
essary to repeat many of them in the Commons just be- 
fore the Christmas adjournment of 191 5. There and 

2* On Sept. 9 and on Dec. 20. L. T., Sept. 10, 1915, pp. 9, 10; 
P. D. C, 1915, LXXVII, 95-122. 



34 



WAR TIME CONTROL OF INDUSTRY 



11 



again at Glasgow, where on Christmas morning he ad- 
dressed some 3,000 shop stewards and trade union 
officials, he dwelt upon the " imperative need of some 
scheme of labour dilution." Women and unskilled men 
ought to be employed upon many tasks which still ab- 
sorbed skilled labour.^^ The same note was struck 
throughout the first half of 19 16. In March the Board 
of Trade appointed a Committee to devise measures to 
extend the employment of women in industrial occupa- 
tions and to report from time to time on progress made 
in various localities and industries.^^ In June it called 
the attention of employers to the possibilities of using 
women's labour in factories and works.^"^ By August, 
Mr. Montague, the new Minister of Munitions, could re- 
port that the number of women employed in munitions 
works was about 400,000, or nearly double the number 
employed a year before. In 19 14- 15 the percentage, 
relative to all such workers, had risen from 9 per cent, to 
II per cent., during the next year to 17 per cent.^^ Five 
hundred munition-making processes w^ere performed by 

25 L. T.„Dec. 27, 1915, p. 3. 

26 B. T. J., Mar. 9, 1916, p. 697. 

27 Ibid., Je. 15, 1916, p. 732. 

28 In August, 1917, it was officially stated that, to the 3,298,000 
women employed in the country before the war, 1,240,000 had been 
added and that the women who had directly replaced men were 
1,256,000. Of the latter, 438,000 were employed in industry, 308,000 
in commerce, 187,000 in government establishments, 32,000 in agri- 
culture (L. T., Aug. 17, 1917. P- 3)- In November, 1917, Sir 
Stephenson Kent stated that nearly one million women were en- 
gaged in munitions work. (N. Y. Times, Nov. 10, 1917.) 



MUNITIONS AND LABOUR 



35 



women, upon two-thirds of which no women had been 
engaged twelve months before. 

Considering the whole situation regarding munitions, 
Mr. Montague pointed out that the three national fac- 
tories of July, 1914, had increased to 95, that the establish- 
ments " controlled " were about 4,000,2^ that the number 
of persons employed in them had increased between June, 
1915, and June, 1916, from 1,635,000 to 2,250,000. Ef- 
forts to bring back skilled workmen from the army had 
restored 45,000; the volunteer scheme had yielded 13,500 
others who had actually been transferred to war work. 
Men of this sort spent most of their time in setting up 
machines and in supervising the work of the unskilled, 
fifteen or twenty of the latter often being assigned to 
one skilled worker. To educate the unskilled, schools 
had been set up. Over 500 people had been trained as 
tool-setters to work on a special type of machine ; nearly 
200 plumbers had been transformed into skilled lead- 
burners, 130 jewelers into gauge-makers.^^ Such were 
the methods and results of diluting labour. 

The achievements of Mr. Lloyd George's new depart- 
ment during the first twelve months of its existence were 
impressive. Nearly three times as many rifles, more dif- 
ficult to produce than any other munition of war, were 
accepted as during the preceding ten months ; many hun- 
dred thousand others were resighted and repaired. 
Nearly twice as many guns for land service were turned 

2» Early in June, 1917, the number was officially stated to be 
4942. M. G., Je. 7, 1917- 
30 P. D. C, 1916, LXXXV, 1699, 1694. 



36 



WAR TIME CONTROL OF INDUSTRY 



out in a month at the end of the twelve-months as at the 
beginning of it. The weekly output of machine guns 
had increased fourteenfold. In the case of ammuni- 
tion the rate of increase was 6^/^ for i8-pounder, 8j4 
for field howitzer, 7J/2 for medium artillery, while for 
heavy shells, the most difficult to produce, it was 22. Of 
high explosives, the output in June, 19 16, was 66 times as 
great as at the beginning of 191 5, of bombs 33 times as 
great as in May of that year.^^ 

The expenditure of the Ministry in the summer of 
19 1 6 was over £1,000,000 a day. To expend this ad- 
vantageously it had seldom been obliged to use its ex- 
tensive powers to examine into the costs of manufactur- 
ers, but it had made alterations in costs with their concur- 
rence. The key to the problem of financial control was 
provided by the cost accounting system introduced into 
the Government's own factories. From the knowledge 
so gained, the Ministry had been able to discern the ex- 
travagance or faulty administration in other factories and 
to check contract prices. The mere threat to examine 
the books of one firm had brought the price of a certain 
material from £30 a ton to £20, thus saving the country 
one-half a million sterling in a short time. Costs in the 
Government's own factories, high at the beginning, fell 
rapidly until they had become much less than the 19 15 
contract prices. The ensuing reduction in home con- 
tracts represented in the case of shells a saving of £20,- 
000,000 a year. American shell contract prices had been 

«Ubid. 1679-1682. 



V 



MUNITIONS AND LABOUR 



37 



1/ 



) 



I 



I 






reduced 15 per cent., Canadian i2>^ per cent., while 
trench-warfare munitions had fallen 40-50 per cent. 
The cost of the large factories erected or being erected 
for explosives and propellants would, Mr. Montague pre- 
dicted, be completely covered in less than a year by the 
difference between the cost of their output and the price 
of similar munitions if imported.^^ 

The method of determining the margin of profit al- 
lowed a controlled establishment was outlined in the 
" Munitions (Limitation of Profits) Rules " of Septem- 
ber 15, 1915. The "standard amount of profits" was 
defined as the average of the amount of net profits for 
the standard period ; and the standard period was the two 
financial years before August 4, 1914. Auditing must 
be done by a chartered or incorporated accountant or by 
an accountant approved in any particular case by the 
Board of Trade. Within six weeks after being requested 
by the Minister of Munitions, the controlled owner was 
required to deliver to him such audited accounts and 
particulars in respect of the controlled establishment as 
might be required. As soon as possible thereafter, the 
Rules proceed, "the Minister shall deliver to the con- 
trolled owner notice of the amount at which the Minister 
is prepared to agree the standard amount of profits, and 
unless within fourteen days thereafter the controlled 
owner shall serve upon the Minister notice of objection, 
the said amount shall be deemed to have been agreed and 
to be the standard amount of profits. If objection shall 
«2ibid. 1696-1697. 



38 



WAR TIME CONTROL OF INDUSTRY 






be so served and the Minister and the controlled owner 
are unable to settle the standard amount of profits by 
agreement, the matter shall be remitted by the Minister 
to the Referee for determination. The amount which 
the Referee shall thereupon determine shall be deemed 
to be the standard amount of profits, whether the amount 
be greater or less than the amount to which the Minister 
was prepared to agree as aforesaid." ^^ 

To achieve the triumphant results of the Ministry of 
Munitions' first year, interferences with the normal course 
of trade were necessitated which went beyond even the 
control of employers' profits and the restriction of trade 
unions' liberties and customs. Raw materials had to be 
taken in hand and watched at every stage of their con- 
version into finished munitions of war. " The great 
lesson of the early months of the War," Mr. Montague 
concluded in his August (1916) speech before Parlia- 
ment, '' was that munitions cannot be obtained merely by 
ordering. You have got to see that the man who takes 
your orders has the plant and the labour; you have got 
to follow up the work process by process; you have got 
to provide from the beginning to the end everything that 
is necessary. That is the cardinal principle of the Muni- 
tions Department."^* 

Acting upon this principle, the Government early in 
19 16 had turned to a consideration of the supplies and 
prevailing prices of iron, steel, and copper. During 191 5 



33 Pari. Paper, 1915, No. 353. 
»* P. D. C, 1916, LXXXV, 1702. 



MUNITIONS AND LABOUR 



39 



these metals had advanced rapidly on the market. In 
part this was due to conditions of the import trade. 
American supplies, available at the beginning of the year, 
became subject to the home demand created by orders for 
munitions and soon semi-steel could scarcely be obtained. 
Freight rates, too, rose from 15 s. to 65 s. per ton. In 
consequence, the price of bar-steel, most in demand for 
making shells, advanced from £7 15 s. in January, 1915, 
to £11 in July, and to £14 in December. American bil- 
lets, which early in the war were about £5 per ton c. i. f., 
commanded, so far as they could be had, about £10 10 s. 
at the end of the year. In the British pig-iron trade war- 
rants for hematite, which is convertible into steel, rose 
from 71 s. a ton in January to 115 s. in December; even 
warrants for Cleveland, not so convertible, advanced dur- 
ing the same period from 55 s. to 76 s. 11 d. The in- 
creased value of the skilled labour needed to transform 
forge pig into bar pig was reflected in the changed relative 
prices of the two. Prices were normally as i to 2 ; they 
had become as i to 3^.^^ 

Such was the situation when, in January 19 16, the 
Government resolved to check any further considerable 
rise in prices. Maximum prices for all finished iron and 
steel goods were fixed,^^ prices which, as regards iron 
bars and angles, were revised in April and, as regards 

85 L. E., Feb. 19, 1916, pp. 34SH350, quoting M. G. and the Iron 
and Steel Trades Review. 

3«The Government already in September, 1915, had fixed the 
prices and controlled the supplies of tungsten and molybdenum. 
B. T. R., Oct. I, 1915, p. 207; Nov. I, p. 281. 



40 WAR TIME CONTROL OF INDUSTRY 

extras, were again revised in November. The stability 
at once attained is shown by the following quotations, 
prices fluctuating little during 1916:^^ 

January, 1915 January, 1916 December, 1916 

Steel ship plates, per ton £ 8 £ 11 10 s. £ 11 10 s. 

Iron ship plates £7155. £11 £ 1 1 10 s. 

Steel sheets (singles) £8 5 s. £ 13 10 s. £ 14 

Common iron bars £ 8 £ 10 10 s. £10158, 

Heavy steel rails £ 6 7 s. 6 d. £ 1 1 £ 10 17 s. 6 d. 

At the end of February official maximum rates, con- 
siderably below those ruling in the market, were set for 
pig-iron. On Tuesday, February 22, Cleveland No. 3 
was sold in Glasgow for 98 s. 6 d. ; on Wednesday there 
came rumours that the Government would insist on trans- 
actions at 82 s. 6 d. Straightway the market broke and 
2500 tons were sold at 87 s. 6d. For a month or so 
private transactions took place at prices above the official 
rate, but gradually *' settlement quotations " grew mean- 
ingless and the metal exchanges in London and Glasgow 
became lifeless.^® 

The fixing of the price of iron involved the stabilizing 
of that of iron ore, a commodity imported in 19 16 to the 
extent of 6^ million tons. The Government, accord- 
ingly, took steps to make foreign ore available at fixed 
prices, manipulating freights in the process. But it had 
to give guarantees, both in the rates of freight and in the 
prices of ore, to meet any differences between the fixed 
prices and actual costs.^^ When finally stating in April 

»7L. E., Feb. 17, 1917, p. 331. 

38 Ibid. Feb. 26, 1916, p. 435 ; Mar. 4, pp. 484-5 ; Apr. i, p. 655 ; 
Apr. 8, p. 700; Feb. 17, 1917, P- 3Z2; B. T. R. Apr. i, pp. 201-203; 
May I, pp. 242-244. 

8» L. T., Jan. 19, 1917. 



MUNITIONS AND LABOUR 4I 

the maximum prices for iron and steel, the Government 
took the precaution of remarking that they were based 
upon the abnormal costs and conditions then prevailing 
and must not be assumed to be indicative of any differ- 
ence in relative values which may have obtained in the 
several districts before the war or may obtain again after 
the war.*^ 

To assure the stability of prices the Government im- 
mediately, on February 29, 19 16, forbade speculative 
trading. From that day dealings in iron, steel, copper, 
zinc, and certain other metals become unlawful unless 
the metal sold was in the possession of the possessor and 
unless the buyer made the purchase on behalf of the 
consumer.^ ^ This action surprised the market as much 
as did the fixing of maximum prices, although the pos- 
sibility of such a measure had been hinted at by the 
Minister of Munitions. During the two months of the 
year the prices of copper, lead, and iron, owing largely 
to speculative dealings, had reached the highest level 
since the outbreak of the war. Copper was higher than 
since 1907 and the other metals had broken previous 
records. In comparison with quotations of 1913 the fig- 
ures were: ^^ 

Highest price Highest price Lowest price 

since the war in igis in igi^ 

Copper, per ton £108 £78 £62 

L^ad 35 22 15 

spelter 120 27 20 

Iron 98 s. 70 s. 6 d. 48 s. 6 d. 

*o B. T. J., Apr. 13, 1917, p. 86. 
«D. F. M., Regulation 30 B. 
*2L. E., Mar. 4, 1916, p. 447. 



I 



42 



WAR TIME CONTROL OF INDUSTRY 



In contrast with these high levels iron was now 
to be sold at 82 s. 6 d. The price of copper could 
not of course be fixed since the supply was imported,*^ 
but at least profits of home speculators were henceforth 
eliminated. 

With prices of iron and steel fixed, the Government 
took its final steps to secure economy and efficiency in the 
use of these and other metals. In order first to insure 
to the empire and the Allies the entire home supply, it 
increased in May, 191 6, the restrictions put upon the ex- 
portation of iron and steel to neutrals. As early as July, 
1 91 5, the exportation of high-speed steel except under 
license had been prohibited, on the suspicion that such 
steel was getting into Germany through neutral coun- 
tries of the continent, especially Switzerland. Only a 
small part of the licences thenceforth asked for were 
granted.^^ From the spring of 19 16 neutral markets 
were further closed, except in so far as the Ministry of 
Munitions through its permits saw fit to adjust the bal- 
ance of trade by allowing, for example, steel rails to go 
to South America.^^ 

It was, however, the Government's endeavour to regu- 
late distribution as between home consumers that gave 
rise to one of the most remarkable of war-time devices. 
This is embodied in what are known as Priority Regula- 

*3 Ibid., Feb. 17, 1917, p. 332. Copper (cash standard) dropped 
to £96 in March as a result of the new order, but by May was back 
to £145. In June there was another decline to £88, but at the begin- 
ning of 1917 the price was £153. 

*4B. T. R., Aug. I, 1915, p. 103. 

« L. E., Feb. 17, 1917, p. 331 ; Aug. 11, p. 230. 



MUNITIONS AND LABOUR 



43 



tions. The extension of them to many mdustries and 
the obstructive part which they can so readily play give 
them a first-rate importance. 

First outlined in a Memorandum of August 4, 1916, 
applicable to certain kinds of steel, they were more fully 
embodied in an Order in Council of November 20, and 
at the same time were extended to other materials.*^ In 
the beginning they affected only controlled establishments, 
but by March, 19 17, more than 90,000 firms had been 
brought within their scope.*^ Briefly put, their purpose 
is to secure to industries in the order of war-time im- 
portance supplies which are essential. They provide, 
relative to steel and to copper wire, that no order for stee/ 
made by the Open Hearth or Bessemer Process (other 
than shell discard quality) or for copper wire shall be 
accepted by a manufacturer unless the purpose for which 
the steel or the copper wire is required has been approved. 
Approval may be evidenced by an Admiralty contract or 
permit (always with reference or number), a War Of- 
fice contract, a Marine Department of the Board of 
Trade permit, a Ministry of Munitions contract, a Com- 
mission Internationale de Ravitaillement or a Commission 
Frangaise sanction, or lastly a Ministry of Munitions per- 
mit. The sanction of the Commissions and the permit 
of the Ministry of Munitions require an added '' Priority 
Classification," emanating from the latter Ministry. A 
manufacturer, in determining what order of priority he 

*6B T. J., Nov. 23, 1916, p. 574; D. R. M., 3rd ed., p. 196. 
*^ L. T., Mar. 10, 1917, p. 7. 



44 



WAR TIME CONTROL OF INDUSTRY 



I 



MUNITIONS AND LABOUR 



45 



should give to the various contracts which come before 
him, each having some one of these endorsements (as of 
course it must have to get consideration), asks himself 
into what " Class " it falls. For there are three Classes 
— A, B, C — taking precedence in that order. Under 
Class A fall the first four contracts or permits above de- 
scribed, together with certain Priority ratings numbered 
up to 5 which the Ministry of Munitions may give to its 
own permit or to the sanctions of the Commissions, 
Class B includes merely Priority rating 6 under a Minis- 
try of Munitions permit. Class C includes all Ministry 
of Munitions permits other than these. Behind this 
somewhat confusing classification is the simple principle 
that work of immediate importance for the prosecution of 
the war must either carry with it a contract from the Ad- 
miralty, War Office, or Ministry of Munitions, or must 
get for itself a permit from the Ministry of Munitions 
placing it in Class A; work of indirect importance for 
the war, or, as the phrase runs, of national importance, 
must get from the Ministry of Munitions a permit placing 
it in Class B ; work not contributory to the war will, under 
its Ministry of Munitions permit, be rated in Class C. 

A manufacturer in executing a contract must give it 
the priority to which its class entitles it; if it be in Class 
A, he must also give it the priority to which its priority 
rating or classification within that class entitles it. Or- 
ders for steel for guns, mortars, gun mountings, gun car- 
riages and parts thereof, for instance, are to be executed 
under Priority Classification i, which comprises most 



J 



urgent war work. Each week manufacturers must make 
to the Director of Steel Production full returns of all 
steel manufactured or delivered. They may manufac- 
ture no steel other than that of shell discard quality for 
any order below Class B. No steel except of this quality 
may, in other words, be used in work which is not either 
direcdy or indirectly of military importance. 

Orders for steel of shell discard quality, if for home 
consumption, may be accepted without contract reference 
or Ministry of Munitions permit, although the purpose 
of the order must be ascertained and entered on the re- 
turn; if the steel is for export, such orders must have a 
permit from the Ministry of Munitions and particulars 
must be given as to purpose and country of destination. 
If the steel is to go to European neutrals, application is 
best made first to the War Trade Department, which ar- 
ranges with the Ministry of Munitions for the issue of a 
priority certificate and later grants the export licence.^® 

The next step in developing the principle of priority 
in industrial work was to extend it from the acceptance 
of contracts to the employment of labour. On Decem- 
ber 19, 19 16, Mr. Lloyd George, in announcing the policy 
of the new Government, said that the War Cabinet would 
put into effect the plan for universal national service al- 
ready adopted by the late Government and about to be 
announced. There would be a new Director of National 
Service, Mr. Neville Chamberlain, Lord Mayor of Bir- 
mingham. By him industries and services would be 

*8 B. T. J., Nov. 16, 1916, p. 506. 



46 



WAR TIME CONTROL OF INDUSTRY 



scheduled according to their essential utility in war time. 
Labour would at once be invited to enroll for war work 
and, should it not respond voluntarily, the Government 
would assume compulsory powers. Workers would 
thereupon be set free from non-essential pursuits to per- 
form more essential services.'*^ 

On February 28, 191 7, accordingly, there was issued 
a Restricted Occupations Order. After calling attention 
to many trades and occupations which the Government 
had declared to be of primary importance, trades which 
were later designated as those to which National Service 
Volunteers might be transferred, the Order named other 
trades not thus important. Such, for example, are the 
making of machines, implements, and conveyances for 
domestic use, the working of stone and slate, house build- 
ing and repairing, the manufacture of pottery, bricks, 
glass, paper, beer, cigars, fancy clothing, millinery, and 
carpets. In these trades no employer might henceforth 
take into his occupation, whether to fill a vacancy or other- 
wise, any man between the ages of 17 and 61, even if the 
man had been previously so employed. Exceptions were 
made only if the employer re-employs a soldier properly 
retired or if he himself is executing work of national im- 
portance. All employers in these trades must give any 
government contract preference and must keep the Di- 
rector General of National Service informed of the na- 
ture and amount of the work done in their factories.^^ 

*»P. D. C, 1916, LXXXVIII, 1352-3. 

60 B. T. J., Mar. i, 1917, p. 614; Mar. 8, p. 666; Mar. 15, p. ^2'7, 



MUNITIONS AND LABOUR 



47 



Thus in the concentration of all the energies of the na- 
tion upon industries conducive to military ends, indus- 
tries not so conducive were pushed to the wall. 

To supervise and extend all these economies, the Minis- 
ter of Munitions in November, 19 16, appointed a Com- 
mittee under the chairmanship of Mr. C. W. Fielding. 
It was instructed to '* consider and suggest the action nec- 
essary to secure economies in metals and materials as re- 
gards their use in munitions of war, taking into con- 
sideration matters affecting design, methods of purchase, 
stocks, imports, distribution, and control," and it was em- 
powered " to take such evidence as may be necessary 
both from the Departments of the Ministry and from 
manufacturers." ^^ 

By the spring of 19 17 the Government was therefore 
in pretty complete control of the vast business of manu- 
facturing munitions, especially in control of the supply 
of iron and steel. Its first endeavour had been to enlist 
in its service private engineering and shipbuilding firms 
and to attempt the mobilization of labour; it had ended 
by fixing the price of iron and steel, by determining the 
allotment of these and other metals to the manufacturer, 
and by directing the supply of labour into essential trades. 
It had, in short, extended its control from producer to 
consumer, undertaking almost everything except the ap- 
propriation of the mines and the works. There remains 
only to consider the success of its ventures. 

On the side of the employer there was little to complain 

51 B. T. J., Nov. 30, 1916, p. 656; Jan. 4, 1917, p. 27. 



48 



WAR TIME CONTROL OF INDUSTRY 



MUNITIONS AND LABOUR 



49 



of, except that non-essential trades were of course pros- 
pering less and less. A more liberal export policy would 
have been welcomed in some quarters, since certain com- 
modities could thus have shared in the higher prices which 
prevailed in the world market. But all steel, munitions, 
and shipbuilding works continued to be crowded with 
orders, chiefly from the Government, and week after week 
the reports are that business is active. Inasmuch as 
prices for iron and steel had been fixed at the relatively 
high figures prevailing early in 19 16 and since all con- 
trolled establishments had been given a liberal margin 
of profit, there was little friction between the Govern- 
ment and the manufacturer. 

Different, however, was the attitude of labour. It has 
been explained that the conferences of the Government 
with labour leaders in the spring of 191 5 and the sub- 
sequent Munitions of War Act made provision for the 
dilution of labour, for the impossibility of the work- 
man's leaving his employment without certificate, for his 
working full time, and for compulsory arbitration. Op- 
position to these measures led Mr. Lloyd George, it will 
be remembered, to charge the unions at the end of 19 15 
with breaking their pledge. 

Open defiance of the Government developed in the 
strike of the " Clyde Workers Committee " late in 
March, 19 16. The general purpose of this strike was to 
force the repeal of the Munitions of War Act and of the 
Military Service Act by holding up war supplies. Re- 
sponsible trade union leaders in the Clyde district had 



acquiesced in the dilution of labour, but not so all the 
men. A dispute arose as to whether stewards should be 
allowed to interrupt their own work and go into other 
departments to inspect arrangements for the dilution of 
labour. The employers objected to such interruption 
but offered to submit to the Clyde Commissioners and to 
give the men's representatives facilities for ascertaining 
what was being done under the dilution scheme. The 
men struck, but strike and strikers were repudiated by 
the Amalgamated Society of Engineers. The Govern- 
ment acted promptly. It arrested nine leaders and con- 
veyed them to the East Coast on a charge of delaying the 
production of munitions in a controlled establishment. 
Its position was in every way stronger than when it tried 
to apply the Munitions of War Act to the South Wales 
miners in the preceding June, and within a week the 
strike was at an end.'^^ Fourteen months later the de- 
ported men were allowed to return to their homes.^^ 

In the late spring of 191 7 differences arose between 
the Government and the Amalgamated Society of En- 
gineers which threw much light upon the two years' work- 
ing of the Munitions of War Act. Since the Clyde 
workers' strike there had been relatively few interrup- 
tions of industry. The workmen had, in general, mani- 
fested an excellent spirit and their grievances had been 
adjusted, though often with delay, by such arbitration 
tribunals as the Committee on Production or the new 

"A. R., 1916, pp. 94-96; P. D. C, LXXXI, 913-915- 
63 L. T., May 30, 1917, p. 7. 



50 



WAR TIME CONTROL OF INDUSTRY 



Ministry of Labour. By May, 19 17, however, causes 
for complaint had developed. It had come about that 
employers more and more endeavoured to substitute 
" piece-work " schedules for time schedules, and the re- 
muneration under these was felt to be unsatisfactory. 
The inability to change employers without a leaving cer- 
tificate was irksome. Suspicion was growing that the 
introduction of labour-saving machines and the employ- 
ment of unskilled operatives was for ever rendering im- 
possible a return to pre-war conditions. 

To these general causes of dissatisfaction were added 
two specific ones. That the execution of the Military 
Service Act of May, 19 16, might be facilitated, the Gov- 
ernment had introduced a trade-card system, which gave 
the trade unions virtual control of exemptions as among 
their own men. This system was now withdrawn, and 
distrust arose lest the War Office was planning to enlist 
skilled workmen. At the same time a Munitions of War 
(Amendment) Bill was introduced in the Commons, 
authorizing the dilution of labour in private works as 
Avell as in munitions establishments. Owing to the great 
expansion of its undertakings, the Ministry of Munitions 
explained, it had need of more skilled workmen than were 
in its service at the moment. The need could be supplied 
only by withdrawing trained men from private works 
and compensating for their withdrawal by adding un- 
skilled workers. Although the Government had two 
years before promised not to extend dilution in this 
way, it now asked to be relieved of its promise. To the 



MUNITIONS AND LABOUR 



51 



request many unions assented, but the Amalgamated So- 
ciety of Engineers did not. When the bill was about to 
be brought up in the Commons, the engineers began to 
leave off work and by the end of May a silent but formid- 
able strike was in progress.'^^ 

At this point the Government took measures to repair 
the situation. The Minister of Munitions entered upon 
a series of conferences with the representatives of unions 
belonging to the Shipbuilding and Engineering Trades 
Federation, and the Prime Minister announced the ap- 
pointment of a Commission to inquire into the causes of 
industrial unrest. As a result, by the middle of June, 
the engineers returned to work, and important changes 
were introduced into the proposed Munitions of War 

Bill. 

The suggested changes in the bill were explained by 
Dr. Addison to some 250 delegates of the Amalgamated 
Society of Engineers on June 13. The Government, that 
it might secure the necessary skilled labour where na- 
tional interest required it, would have to extend, as it 
had planned, the dilution of labour to certain private es- 
tablishments, and would have to declare certain classes 
of work, such as the manufacture of agricultural ma- 
chinery, munitions work. When, however, such exten- 
sion was to be ordered, notice of it would be widely given 
in the newspapers and three weeks would be allowed for 
the receipt of any protest from the trade unions con- 
cerned and for action thereon. Prohibition of the right 

5*M. G., May 14, 19, 26, 1917; New Statesman, May 19, Je. 9. 



52 



WAR TIME CONTROL OF INDUSTRY 



MUNITIONS AND LABOUR 



53 



to strike would not be extended to workers in these 
private establishments. Dilution of labour in such es- 
tablishments would cease at once at the close of the war 
and any employer seeking to continue it would be liable 
to a fine of £5 a day for each man affected. Not only 
were these concessions proposed relative to dilution of 
labour, but to placate the unions other changes in condi- 
tions of labour were suggested. A wage award, ap- 
plicable to the employers of a single firm, might be 
extended by the Ministry of Munitions to all workers 
similarly employed upon munitions work. Arbitration 
tribunals should, if possible, make their award within 
fourteen days from the date of reference. Compulsory 
arbitration should not continue for twelve months after 
the war, as provided in the Munitions of War Act, 191 5, 
but liberty would at once be restored to the unions. 
Finally, the leaving certificate would be abolished, al- 
though an employer might not take on a man leaving 
munitions work for private work without the consent of 
the Ministry of Munitions, nor might he " poach," i. e., 
offer to pay a skilled worker more than he was paying his 
own men similarly skilled.^^ These were the Govern- 
ment's preliminary concessions. 

Meanwhile the Commission of Inquiry into Industrial 
Unrest, appointed on June 12, worked so speedily that 
its task was finished by July 17. Upon it sat many repre- 
sentatives of labour and to secure expedition it subdivided 
itself into eight Commissions, each devoting itself to a 

55 L. T., Je. 14, 1917, p. 2. 






different part of England, Scotland, or Wales. Each 
commission met from ten to thirty times and examined 
from 100 to 200 witnesses. 

Of its report Mr. G. N. Barnes made a useful prelimi- 
nary survey, explaining the general causes of unrest as 
follows.^^ All Commissions agreed that the most im- 
portant cause — and one colouring subsidiary causes 
which alone might have brought no complaint — was the 
high cost of food in relation to wages, conjoined with the 
unequal distribution of food. Men felt that sections of 
the community were profiteering. The Commissioners, 
therefore, recommended an immediate reduction in the 
price of food, any loss accruing therefrom to be borne in 
part at least by the state. They also recommended a 
better system of distribution. 

Much discontent arose from the working of the Muni- 
tions of War Act and the abrogation of trade union 
privileges. In the first place, personal freedom was re- 
stricted by workmen being tied to particular factories. 
Many so tied were unable to get wages commensurate 
with their skill, the wages of skilled men often being less 
than those of the unskilled. In the second place, changes 
regarding working conditions, especially the introduction 
of female labour, had been made without consulting the 
men. Lack of confidence in the Government was thereby 
generated and a feeling that promises regarding trade 
union customs would not be kept. Lastly, there had 

56 The Report is Cd. 8662-5869; Mr. Barnes' summary is in L. T., 
Jy. 2Z, 1 91 7, pp. 7-^- 



54 



WAR TIME CONTROL OF INDUSTRY 



been delay in the settlement of disputes. In some in- 
stances ten weeks had elapsed without a settlement, but 
a strike put the matter right in a few days. In one case, 
employers and men came to an agreement, but the Min- 
istry of Munitions withheld its assent, with the result 
that fourteen weeks were required to get a decision from 
the Committee on Production, the men meanwhile stop- 
ping work. This last episode illustrated another charge 
brought against the Government — the lack of co-ordina- 
tion between departments dealing with labour. 

To obviate these occasions for dissatisfaction the 
Commission offered various remedies. Labour should 
take part in the affairs of the community as partners 
rather than as servants ; the leaving certificate should be 
abolished or modified; the Government should make an 
authoritative statement when it introduces changes to in- 
crease output ; it should also make a statement as to vari- 
ation from pledges already given ; there should be better 
administrative machinery for dealing with labour — one 
central authority with local boards for local disputes, or a 
local commissioner with technical knowledge; lastly, the 
principle of the Whitley Report should be adopted. This 
Report, made in June, 19 17, recommended the forma- 
tion of joint standing industrial councils in the several 
industries where they do not already exist, councils com- 
posed of representatives of employers and employed, in 
the workshops, in districts, and nationally, to strive for 
closer co-operation between employers and employed. 
Other causes of unrest the Commission discovered. 



MUNITIONS AND LABOUR 



55 



One, quite as widespread as the cost of food and the in- 
fringement upon union privileges, was the friction oc- 
casioned by the Military Service Acts. To be sure, the 
irritation caused by the hasty and unheralded withdrawal 
of the trade-card scheme had subsided, but there was 
fresh anxiety over the working of the Schedule of Pro- 
tected Occupations, which would need careful handling. 
Some causes were not general, but were none the less 
acute. Insufficient housing accommodations, a scanty 
supply of acceptable beer, inconsiderate treatment of 
women, whose wages were sometimes as low as 13 s., in- 
adequacy of the £1 weekly maximum of the Workmen's 
Compensation Act, delays in granting pensions — all were 
irritants in one region or another, but for the most part 
they have no immediate connection with the Govern- 
ment's wartime control of industry. One which did have 
such connection the Government to some extent promptly 
remedied. By an Order, effective August 15, 19 17, 
women of 18 and over were to receive an advance in 
wages of 2 s. 6 d. per week and girls under 18 an advance 
of IS. 3d., provided they were employed on munitions 
work in controlled establishments or in uncontrolled ones 
to which orders of the Ministry regulr.ting women's 
wages had already been applied.^"^ 

While the Commission made its investigations and 
formulated its report, the new Minister of Munitions, 
Mr. Winston Churchill, continued the negotiations with 
the trade unions. Upon these negotiations, and also in a 

" L. T., Aug. 3, 1917, p. 3. 



56 



WAR TIME CONTROL OF INDUSTRY 



I <! 



measure upon the Commission's report, depended the 
form finally assumed by the Munitions of War (Amend- 
ment) Bill. By the end of August a part of this, but 
not all of it as at first formulated, became law. The 
clause upon which the Government had been most intent 
was at length omitted — the one permitting the extension 
to private establishments of the dilution of labour. To 
this provision the Amalgamated Society of Engineers 
maintained its opposition and refused representation upon 
the Trade Unions Advisory Committee, which Mr. 
Churchill was trying to form, so long as the clause was 
retained. Rather than continue the friction which Gov- 
ernmental insistance would have produced, the Minister 
of Munitions yielded, anxious though he was to extend 
dilution. Further legislation along these lines he post- 
poned until the autumn session of Parliament. 

On the other hand, the provision which the unions were 
most anxious to see included in the bill was incorporated. 
The Minister of Munitions was given the power to abol- 
ish leaving certificates. Why such abolition could not 
take place for some six weeks, Mr. Churchill explained 
in the House. As the Commission had pointed out, 
many skilled men were at the moment receiving for time- 
work relatively lower wages than unskilled newcomers 
were paid for piece work. To abolish the leaving cer- 
tificate at once would encourage skilled but underpaid 
men to leave their employment. Arrangements for re- 
munerating them fittingly, he remarked, were the first es- 
sential. On the passage of the bill, the readjustment in 



MUNITIONS AND LABOUR 



57 



question was undertaken and soon it was announced that 
after October 15, 19 17, leaving certificates would be abol- 
ished.^^ The readjustment involved an advance of 12 
per cent, in the wages of skilled munitions and ship-yard 
time-workers. Eventually unskilled time-workers had 
to be given the same increase to keep them from going 
over to piece-work. Altogether 900,000 men had their 
wages advanced by £14,000,000 a year.^^ Thus two 
of the most irritating grievances growing out of the 
Munitions of War Act, the inability of workmen to 
change their employment and the inadequate compensa- 
tion often received by them in the shop which they 
could not leave, were satisfactorily remedied. 

At the same time another recommendation of the Com- 
mittee on Industrial Unrest received the Government's 
attention. As a result of Mr. Churchill's vigorous ef- 
forts, a committee of trade unionists was appointed to 
advise the Minister of Munitions on industrial questions. 
As soon as the abolition of leaving certificates was an- 
nounced, this new Trade Unions Advisory Committee 
exerted its influence and issued an appeal to munition 
workers. Pointing out that, if a large number of them 
left their work at once, the output of essential munitions 
would be impaired, it urged them at least to give notice 
of intention to leave or, far better, to enrol as War 
Munitions Volunteers. The volunteer scheme had been 
so extended, the Committee indicated, as to insure to men 

58 L. T., Aug. 16, 1917, p. 10; Aug. 2-^, p. 8; Sept. 26, p. 3. 
69 Ibid., Nov. 29, p. 10. 



58 



WAR TIME CONTROL OF INDUSTRY 



MUNITIONS AND LABOUR 



59 



t 



<♦ 



working away from home a subsistence allowance if 
they should enrol and be assigned to the establishments in 
which they were then working. Railway passes, too, 
on public holidays would be given.^^ Thus the per- 
suasion which the Government wished to exert was voiced 
by an authoritative committee of the men themselves and 
the creation of a mediatory body at once proved its value. 
A final step was the adoption of the recommendation 
of the Committee on Industrial Unrest which related to 
the establishment of the Joint Standing Industrial Coun- 
cils proposed in the Whitley report. During the war, 
the Government pointed out in announcing its decision, 
authoritative bodies, representative of both employers and 
employes in a trade, could seldom be found. Frequently 
it had wished to confer with such bodies, but had been 
unable to do so. Need for them would exist after the 
war quite as much as during its progress. At all times 
they should conduce to insuring a satisfactory under- 
standing between employers and men. The Government, 
therefore, proposed to create such councils and in the 
future regard them as official standing consultative com- 
mittees. With them it would confer on questions affect- 
ing the industries which they respectively represented. 
Each trade should constitute its own council, the councils 
in turn electing their own officers and determining their 
own functions and procedure. Where an industry was 
based on district organization, this might well be reflected 
in district councils rather than in a national council, which 

•<> Ibid., Sept. 26, 1917, p. 3. 



would be appropriate to a trade organized on a national 
basis. Members of the councils would be representatives 
of existing organizations of employers and workmen, al- 
though the councils themselves might grant representa- 
tion to new bodies coming into existence. All interests 
within a trade ought to be given opportunity to express 
themselves. Co-operation of all elements within an in- 
dustry, the Government concluded, would do much to 
setde problems of reconstruction after the war.^^ 

The spirit of compromise and conciliation thus mani- 
fested by the Government in the adoption of certain rec- 
commendations of the Committee on Industrial Unrest 
argued well for the future. One popular grievance, how- 
ever, surpassed in gravity any discontent arising from 
the Munitions of War Bill. This was the high cost of 
living and the belief that the Government had not done 
all in its power to prevent rising prices. As it happened, 
the late summer and the autumn of 1917 saw remedial 
measures adopted in these matters as well. Maximum 
prices were fixed in one commodity after another, that 
for bread being so favourable that a state subsidy was 
mvolved. The description of these measures belongs to 
another chapter, but the cumulative effect of them should 
not be forgotten when other action directed toward the 
same end is considered. The raising of the wages of 
underpaid munitions workers, the abolition of leaving 
certificates, the establishment of a Trades Union Advisory 
Committee, the creation of Joint Industrial Councils were, 
«i Ibid., Oct. 25, p. 8. 



6o 



WAR TIME CONTROL OF INDUSTRY 



quite as much as the new food regulations of 19 17, di- 
rected toward the conciliation of labour. Without the 
co-operation of the workmen it was clear that the war 
could not be won, and the attitude of a large part of the 
Labour group toward the Stockholm conference brought 
home to the Government the necessity of a conciliatory 
policy. If there was to be a further taking of men for 
the army, every possible concession was desirable; for a 
measure of this sort would, as had been shown by the 
temper of the men in the summer, be most unacceptable, 
and the successful prosecution of the war might easily 
be involved. 



THE COAL MINES 



Whereas the Government promptly and without ques- 
tion took over the railways, and less promptly, though 
with equal decision, assumed control of plants which 
could make munitions, it took over the mines only after 
more than two years and then did so with evident re- 
luctance. Where, too, the administration of the railways 
and of munitions works involved it in no insoluble difficul- 
ties, the problem of the mines was intricate and baffling. 
This assumed three main aspects. The first was a falling 
off in the output of coal, which affected one of Great 
Britain's important exports and involved at a critical time 
the balance of trade. The second was the enhanced 
price of coal in the home market, creating discontent and 
a belief that the profits of owners or dealers were unduly 
large. The third was the revolt of one of the most pow- 
erful and irreconcilable groups of men in the country, 
the Miners' Federation, especially the branch of it resi- 
dent in South Wales. Since difficulties arose in pretty 
much this sequence, they may be so described. 

By February, 19 15, both the decreased output and the 
increased price of coal attracted the attention of the 
House of Commons and of the Ministry. Two Com- 
mittees were appointed to report, one on each subject. 
The Committee concerned with output ^ made its first 

1 Committee on Conditions prevailing in the Coal Mining Indus- 
try due to the War. Appointed Feb. 23, 1915. 

61 



62 



WAR TIME CONTROL OF INDUSTRY 



report on May 27, 191 5, another report in December of 
that year, and a third in September, 1916.^ 

Up to the end of February, 191 5, according to its first 
findings, the net decrease in the number of persons em- 
ployed in the mines was 134,186, or 133^ per cent, of 
the number employed in July, 19 14. The average de- 
cline in output from August, 1914, to February, 1915, 
compared with the average output of the twelve preced- 
ing months, was also 133^ per cent. (3,044,329 tons 
monthly). The decline was easily accounted for by the 
enlistments, 191,170 miners having joined the colours up 
to the end of February. But explanation was not rem- 
edy and the falling off in output W'Ould, if continued, re- 
duce the year's production by some 36 million tons. 
Even if the normal exportation of 24 million tons to Rus- 
sia, Germany, Austria, and Belgium was deducted from 
this deficit, there would still remain a shortage of 12 mil- 
lion tons. The home demand was not likely to decrease 
since certain industries were very active. 

Under the circumstances the Committee thought it 
questionable whether further recruiting among the miners 
should be encouraged — for the miners had proved ener- 
getic recruiters. Turning to the possibility of increasing 
the output under existing circumstances, the Committee 
entertained no doubt that much could be done if the will 
were not wanting. Absenteeism was the dominant evil. 
Although it had declined from 10.7 per cent, to 9.8 per 

2 Cd. 7939. 8147, 8345. 



THE COAL MINES 



63 



cent, if the seven months of war were compared with the 
preceding seven months, still 4.8 per cent of that which 
still prevailed was avoidable. Were there no unavoid- 
able absenteeism, the output of coal would be from 13 
to 14 million tons greater during the year than it then 
was. The 12 million tons shortage would disappear. 
Among its recommendations therefore the Committee 
placed first a proposal that miners be urged, preferably 
by the executive of the Miners' Federation, to eliminate 
all avoidable absenteeism. Should this fortunate result 
be attained, the demands of the home and the existent 
foreign market could be met. Holidays too might be 
curtailed. Lord Kitchener's appeals at Easter and Whit- 
suntide had been not unsuccessful and 1,000,000 addi- 
tional tons of coal had been raised. 

Other devices for increasing output the Committee con- 
sidered but with less enthusiasm. A suspension of the 
Eight Hours Act of 1908 would not affect the Northern 
coalfields, since before its passage the hewers (not the 
transit hands) already worked only seven hours and 
would not now work longer unless serious emergency 
could be shown. In Lancashire, Yorkshire, and South 
Wales, however, where men repair their working places, 
as the hewers farther north do not, the addition of 
twenty or thirty minutes to the working day would be 
helpful. No further employment of women or boys was 
recommended.^ If home needs were not being met, ex- 

3 At the end of 1913, 6554 women were employed on light sur- 



64 



WAR TIME CONTROL OF INDUSTRY 



port should be restricted, but not in so far as the ex- 
ported coal served the British mercantile marine and 
British allies or secured such essential return cargoes as 
grain from the Argentine and iron ore from Bilbao. 
Lastly, the Committee urged economy on the part of the 
public. The shortage could be met quite as effectively 
by a wise restriction of demand as by an increase of the 
supply.* 

Before the report was published, the Government had 
acted in accordance with one of its recommendations. 
By order-in-council, effective May 13, 191 5, it assumed 
powers to prohibit the export of coal to neutral countries, 
to provide adequate supplies at reasonable prices for the 
British navy and for the navies, railways, and national 
requirements of the Allies, and, finally, to ensure a more 
regular supply for the home market. Thenceforth no 
coal might be shipped without the assent of the War 
Committee of the Board of Trade. The amount of coal 
thus bought under license regulations was large, the nor- 
mal exportation of the United Kingdom being some 97 
million tons, about one-third of the entire output. Of 
the amount exported during the war, neutrals had been 
getting 2y per cent. Upon them fell the brunt of the 
new regulation and the decrease in the June exportation 

face work about the mines (2933 of them in Scotland). After the 
beginning of the war the number of women employed in the Scot- 
tish coal-fields increased but the Committee could not indicate 
to what extent. As for boys, none under fourteen might be em- 
ployed underground, and none under thirteen for more than 54 
hours a week or 10 hours in one day. 
* Cd. 7939. 



THE COAL MINES 



65 



compared with that of April was 125,000 tons.^ Li- 
cences for sending coal to South America, Scandinavia, 
and Spain were refused. In the case of Spain it was for 
a time felt that exportation should be permitted, since the 
coal was used in working mines whence iron and copper 
were sent to Great Britain. But of late there had been 
reason to believe that coal reached Germany indirectly 
from Spain. The restrictions at least affected favour- 
ably rates for France and Italy .^ 

The second Governmental committee, also appointed 
early in the spring of 191 5, was instructed to concern 
itself with the enhanced price of coal, to discover whether 
there was justification for this, and if not to suggest 
remedies for it. The Committee was promised by Mr. 
Runciman, President of the Board of Trade, in response 
to parliamentary demand. In February, Sir A. B. Mark- 
ham, supported by Messrs. Rowntree and Bathurst, had 
urged that the Government forbid by proclamation the 
sale of coal at prices exceeding those of twelve months 
before the war by more than from one to two shillings. 
Mr. Runciman replied that the rise in price was peculiar 
to London and would be modified by the efforts of the 
Executive Committee of the Railways.*^ 

The interpretation put by workmen upon the situation 
was expressed in a manifesto of May 2y, 191 5, issued by 
the Management Committee of the General Federation of 

5W. H. Renwick, The Coal Industry under War Conditions, 
Nineteenth Century and After, August, 1915. 
6L. T., Je. 9, 191 5, p. 5. 
7 P. D. C, 1915, LXIX, 1 189. 



. 



66 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



67 



Trade Unions. With the warning that "a fortnight 
hence may see the whole of Lancashire in the throes of a 
gigantic industrial dispute," the document charges the 
Government with ineffectively handling food prices and 
war profits, but particularly with '* the failure to deal with 
the coal question when the conspiracy to increase price is 
so obvious." Not only do high prices for coal endanger 
comfort and health, it is added, but they decrease the pos- 
sibilities of employment, since some manufacturers talk 
of shutting down factories.^ 

The findings of the Committee, made public in March, 
1915,^ tended to justify both the contention of Mr. 
Runciman and that of the unions. It appeared that dur- 
ing the winter of 1914-15 the North and the Midlands 
had suffered no marked rise in the price of household 
coal. On the other hand, the Southern counties and Lon- 
don (whence came most of the Committee's evidence) 
had witnessed an advance of between 9 s. and 14 s. per ton, 
according to quality. Behind this might lie either manip- 
ulation of the market by producers and dealers or such 
difficulties of traffic as would curtail the supply and send 
up the price. Examining the first possibility, the Com- 
mittee did not discover the existence of rings of colliery 
owners and coal merchants, although it did find that ** a 
few leading firms decide upon increased prices which 
without more ado become the public prices of the day and 
are advertised next day in che newspapers." In London 

8L. T., Je. s, 191S, p. 5. 
» Cd. 7866. 



the best grades of household coal are sold under a sliding 
scale, one-half of any advance in the retail price accruing 
to the colliery owner, one-half to the dealer. The Com- 
mittee pronounced the system indefensible, but did not 
attempt to estimate the extent of its responsibility for the 
increased London prices. 

Regarding another element of the situation the Com- 
mittee was more specific. This was the hindrance to 
transportation arising from war conditions. The 
marked shortage of empty wagons worked less to the dis- 
advantage of districts near the coal fields than it did to 
London. Supplies of coal were more readily furnished 
if the wagons could make a short journey and return 
quickly. In as much as London was rather far from the 
mines, 3 s. extra was not improperly charged for delivery 
there. But the consumer had been asked for much more 
than this. Such additional demand could in part be 
explained by a closer scrutiny of conditions of traffic. 

In normal times London imports annually 8,000,000 
tons of coal by sea from the North, paying about 3 s. per 
ton for carriage. At the outbreak of the war the Gov- 
ernment had requisitioned large numbers of the coal boats, 
finding them exceptionally useful, and had not replaced 
them. Such as continued to ply from north to south 
found the sea abounding in dangers — buoys removed, 
lights extinguished, the channel covered with minefields 
— and with proper caution extended the time of their 
voyage threefold. The shortage and the slowness were 
reflected in an advance of freights to as much as 13 s. 



68 



WAR TIME CONTROL OF INDUSTRY 



6d. at times, 7 s. still ruling in the spring of 1915. 

To the Committee the outlook for the winter of 191 5- 
16 seemed serious. Its recommendations were twofold. 
The Government should invite the London County Coun- 
cil and other public bodies to buy supplies of coal and 
store them during the summer. To be sure, this would 
enhance the summer price of coal, would require large 
capital and would involve difficulties of storage, but it 
would be in the public interest. Should the Government 
also control the output of the collieries during the war? 
Despite the magnitude of the undertaking which would 
involve 1,270,000 employes and an output of 287 mil- 
lion tons, the Committee were of the opinion that if 
prices did not return to a reasonable level, it should take 
steps to do so. Maximum prices, either " recom- 
mended " or fixed by the Government, it did not 
favour. ^^ 

Soon the question of the price of coal came up in the 
House of Commons. Mr. Runciman was urged to do 
something bold and practical. After explaining in his 
reply, as the Committee had done, the difficulty of trans- 
porting coal to London, he admitted that merchants and 
producers had acted unjustifiably. With the former, 
who, to be sure, were hampered by loss of horses and by 
the general disorganization, he had held several con- 
ferences and had at length arranged that profits should 
be strictly limited. The producers were less tractable. 
They urged that rising wages had increased their costs 

10 Cd. 7866. 



i 



I 



K 



THE COAL MINES 69 

to an extent which they professed to estimate at i s. 6 d. 
per ton, a figure which without doubt was " a gross ex- 
aggeration." The actual estimate would be nearer pence 
than shillings and the existing pit-head price of coal was 
far in excess of what expenses would justify. This dec- 
laration brought from the Labour members cries of 
" Hear, hear! " The owners of the collieries, continued 
Mr. Runciman, urge that their industry is speculative, 
making good the losses of one year from the profits of 
the next. To this plea he had responded that the current 
year should not be regarded as one which might justify 
the taking of compensatory profits, and he had almost 
reached an agreement with Midland owners. He hoped 
soon to announce that the companies had come a litde 
nearer to what was expected, he might say demanded, of 
them. For the Government and Parliament would not 
tolerate exploitation.^^ 

What lay behind this scarcely veiled threat was the 
Government's determination to limit the price of coal by 
statute if necessary, a departure from the recommenda- 
tions of its Committee. At the same moment, however, 
a series of critical events deferred for a time such action. 
To the parties thus far active — the Government, the 
owners, and the public — was added a fourth and more 
determined one, the miners. 

The spring of 19 15 saw the first demand for war bo- 
nuses. The successful agitation of the railwaymen in 
February has been described. By the end of May 986,000 

" P. D. C, 1915, LXXII, 403-419. 



f 



70 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



working people of one sort or another had received war 
advances, from ten to twelve millions had not.^^ It was 
during this same month of May that the miners got their 
first bonus. In April they had asked for a 20 per cent, 
increase in their earnings, to which the coal owners had 
responded by an offer of 10 per cent. Further advance, 
however, the owners would consider if in any case it 
were recommended by a local wages board. In this pro- 
viso lay embedded a principle, clearly gasped by the con- 
tending parties. The coal owners objected strongly to 
setting aside machinery established for dealing locally 
with disputes. Different economic conditions relative to 
the export and the home trade, they contended, made 
uniform treatment of the wages problem impossible. 
The Miners' Federation, on the other hand, demanded 
that wages be settled on a national basis. The increased 
cost of living was national, not local. Why should not 
the antidote be equally national, or in other words, why 
should not the increase be uniform? ^^ Mr. Asquith was 
on May i invited to act as arbitrator and his award in- 
clined toward the view of the coal owners. Although a 
case had been made out for an immediate advance of 
wages, the extent of this, he ruled, should be determined 
by district boards and committees.^^ Thus the first war 
bonus for coal miners varied from 10 per cent, to 
20 per cent, according to local conditions. 

12 L. T., Je. s, 1915, p. 5. 

13 Ibid., May 4, p. 10. 
i*A. R., 1915, p. 141- 



71 



Meanwhile the storm gathered in another quarter. On 
April I the miners of South Wales seized the war time 
opportunity to hand in notices terminating on June 30 the 
existing five-year agreement regarding wages in that dis- 
trict. Their new demands were far reaching. They 
asked for a three-year agreement co-terminous with one 
already current in the Midlands. Specifically they asked 
that the minimum rate should be higher than was the 
maximum rate under the expiring arrangements; that 
there should no longer be a maximum rate; that the 
standard rates of 1879 ^^^ ^^77 should be raised by 50 
per cent, and 35 per cent, respectively; that all men em- 
ployed on afternoon and night shifts be paid at the rate 
of six turns for five worked ; and that every adult surface- 
man be paid not less than 5 s. 6 d. a day. At two special 
meetings of the Conciliation Board, representatives of the 
employers heard the men's arguments but refused their 
demands. Negotiations were for the time broken off.^^ 
On June 9 the men proposed among other things that 
there be a joint audit of the selling price of coal for each 
month from July, 1914, to May, 1915. Instead of this 
the South Wales Coal-owners' Association two weeks 
later issued its own audit, based on the business of 79 
firms. Of the total output of these firms (33,983,829 
tons) 19.8 per cent, was produced either at a loss or with- 
out profit, 49.4 per cent, at a profit of less than i s. per 
ton, only 15.4 per cent, at a profit of 2 s. 6 d. per ton.^^ 

" L. T., Je. 10, p. 5. 

"Ibid., Je. II, p. 10; Je. 28, p. 3; P. D. C, 1915, LXXII, 443-448. 



Ml 



72 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



73 



'!i| 



To such modest returns the owners could refer and could 
point out too that they were now obliged to give to all 
colliery workers a war bonus of 17^^ per cent, the equiv- 
alent of I s. per ton. They felt strongly the unwisdom 
of entering during such critical times into a three years* 
agreement. At the cessation of hostilities the condition 
of the coal trade was likely to be serious. The British 
Admiralty was at the moment an extensive buyer in 
South Wales and had accumulated large stocks. On the 
conclusion of peace it would no longer buy but would 
sell in order to set tonnage free.^^ This situation the 
miners also foresaw and made it a ground for their three- 
year demands. Since their wages varied with the sell- 
ing price of coal, how could they hope without an agree- 
ment of some duration to maintain their present in- 
come? ^^ Thus the future as well as the present fur- 
nished grounds for the approaching conflict. 

By the end of June the owners had placed their case in 
the hands of the Government, having held long consulta- 
tions with Mr. Runciman, President of the Board of 
Trade, and with Sir George Askwith, a permanent of- 
ficial of the Board.^^ Mr. Runciman, in consequence, 
placed before the miners various modifications of their 
proposals. It was in vain. On July 12 delegates of the 
South Wales Miners' Lodges in conference at Cardiff 
summarily rejected them, refused anything short of their 

"General Meeting of the Ebbw Vale Steel, Iron, and Coal Co., 
Je. 29, 1915 (L. T., Je. 20, p. 15). 
18 L. T., Jy. 16, 1915, p. 9. 
i» Ibid., Je. 30, p. 15. 



original demands, and resolved to stop the collieries on 
July 15 if the concessions were not granted.^*^ 

The Government, rebuffed as a conciliator, determined 
to use its strong arm. Within a fortnight it had achieved 
a triumph in the labour world and in the House of Com- 
mons by the passage of the Munitions of War Act.^^ 
One of the significant features of this was its provision 
that all industrial disputes involving the safety of the 
realm during the war should be subject to compulsory 
arbitration. Failure to submit to such arbitration was 
an offence against the state punishable with a fine of £5 
for each day or part of day during which work might be 
suspended. The provision was, however, by agreement 
clearly applicable only to certain trades which had ac- 
cepted it. To this agreement the miners were not a party, 
and the Minister of Munitions, Mr. Lloyd George, was 
at the moment when the South Wales dispute arose, en- 
deavouring to have them and the cotton operatives come 
under the Munitions of War Act. In his interview with 
the Executive Committee of the Miners' Federation of 
Great Britain, this body had shown itself unwilling, as 
always, to accept compulsory arbitration. Assurances it 
would give that everything possible would be voluntarily 
done to avoid strikes. Mr. Lloyd George, in turn, while 
saying that he strongly wished the miners to come into 
his scheme, explained that he would take no steps to force 
them into it.^^ To this stage the negotiations had come 

20 Ibid., Jy. 13, p. 6. 

21 Cf., above pp. 30, 31. 

22 L. T., Je. 26, 1915, p. 5; Jc. 30, p. IS. 



74 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



75 



in 



at the end of June, when they were suspended during 
the settlement of the South Wales dispute. Indeed, ar- 
rangements were at the moment in progress for holding a 
great meeting at London during the first fortnight of 
July. At this gathering, delegates, representing miners 
and mine-owners from every district in England, were to 
consider the recommendations of the Home Office Com- 
mittee on Coal Supplies, and enthusiasm for co-operative 
action in increasing the output was expected. ^^ 

In view of the Welsh miners' threat of July 12 to stop 
the collieries on July 15 if their terms were not granted, 
Mr. Runciman announced in the House of Commons on 
the 13th that the Government would apply to them by 
proclamation the Munitions of War Act. The dispute 
had now become prejudicial to the manufacture, trans- 
port, and supply of munitions of war. So far as an 
amendment had excluded the miners from the operation 
of the Act, it had made the exclusion dependent upon 
their possessing, in the opinion of the Minister of Muni- 
tions, other means for the settlement of disputes. The 
announcement of the President of the Board of Trade 
was received with cheers, the Labour benches offering no 
opposition but only requesting that the decision be made 
known at once to the men in the coalfield. So certain 
was the Government that a strike would be avoided that 
it did not set up a South Whales Munitions Tribunal to 
deal with violations of the Act. It relied rather upon the 
Executive Committee of the Miners' Federation, for 



this body had given a pledge to Mr. Lloyd George and 
Mr. Arthur Henderson that there should be no strike 
in the coalfields during the war. Moreover, the Parlia- 
mentary Committee of the Trade Union Congress was 
to meet on the morrow and it was expected that or- 
ganized labour would put forth every effort.^^ 

So far as the responsible leaders of the miners were 
concerned, the Government had made no miscalculation. 
On July 14 the Executive Committee of the South Wales 
Miners' Federation reported that they had advised the 
men to go to work on day-to-day contracts until a settle- 
ment was reached. They therefore requested Mr. Runci- 
man to resume negotiations. What had not been cor- 
rectly appreciated in London, however, was the temper 
of Cardiff. There neither the intimidation of the Gov- 
ernment nor the reasonableness of their own Executive 
Committee impressed the men. By a vote of 180 to 113 
the Conference of South Wales Delegates decided to re- 
ject their Executive's recommendation that there be no 
stoppage of work, and thereby they committed themselves 
to the strike. This legislative body had drifted away 
from its eminent leaders and had come under the influence 
of sub-leaders and district agents, several of them apostles 
of Syndicalism and eager to take any opportunity to 
force the Government to nationalize the mines. It is 
possible that a ballot of the coalfield would not have 
approved its decision. However that be, on July 15 
200,000 miners ceased work.^^ 



28 Ibid., Je. 26, p. 5. 



2* Ibid., Jy. 14, p. 8; P. D. C, LXXIII, 739, 740. 
25 L. T., Jy. 15, 1915, p. 7; Jy. 16, p. 9. 



nl 



76 



WAR TIME CONTROL OF INDUSTRY 



■ J« I 



m 






4 



%\ 



The Minister of Munitions at once set up a General 
Munitions Tribunal for Wales and Monmouthshire. 
The men felt, however, that the Government could not 
enforce the Act and they were angered by the Procla- 
mation extending its provisions to them. This feeling 
made it more difficult for the Executive Committee, al- 
ready repudiated, to negotiate to any advantage. For 
a time the Committee was hopeful of limiting the strike 
to twenty-four hours, but its conference on the i6th 
with Mr. Runciman was barren of result. Nor would 
the President of the Board of Trade summon the newly 
accepted leaders of the miners to London. The dead- 
lock continued until on the 19th Mr. Runciman, Mr. 
Lloyd George, and Mr. Arthur Henderson went to 
Cardiff. Next day Mr. Lloyd George's personal appeal 
to his fellow countrymen availed as nothing else had 
done.2^ The week's strike was ended not through the 
operation of the Munitions of War Act nor the leader- 
ship of the Executive Committee, but through the per- 
suasiveness of the Minister of Munitions and the grant 
of concessions not unlike those demanded from the first. 
Until six months after the close of the war, and longer, 
unless three months notice be given, a new standard, 50 
per cent, above the old standard of 1879, was to be set 
up; and this new standard plus 10 per cent, should serve 
as a minimum for wages. No rise in wages could, how- 
ever, take place until a selling price corresponding with 
the new minimum should be decided. Henceforth there 

26 Ibid., Jy. 15, 1915, p. 7; Jy- 16, p. 9; Jy- 17. p. 6; Jy. 21, p. 7. 



THE COAL MINES 



77 



was to be, as the men wished, no maximum wage. Men 
employed on afternoon and night shifts were to be paid 
at the rate of six turns for five — precisely the miners' 
demand. Surfacemen receiving less than 3 s. 4 d. a day 
were to have that sum, which, however, was less than had 
been asked for. No one was to be penalized for the 
present dispute and every effort was to be made by all con- 
cerned to maintain and increase the output of coal. The 
cost of the strike was estimated as about £1,500,000, the 
falling off in coal mined at about 1,000,000 tons.^*^ The 
Munitions Act had proved inapplicable to men who had 
not agreed to its provisions, and responsible labour lead- 
ers had been repudiated by their supporters. There was 
much that was ominous for constituted authority in the 
history of the South Wales coal strike, only the abilities 
of Mr. Lloyd George showing the brighter for it. 

After this disconcerting fortnight the Government re- 
turned to its legislation regarding the price of coal. Mr. 
Runciman had introduced a Price of Coal (Limitation) 
Bill which on July 19 came up for second reading. Its 
chief provision was that coal at the pit's mouth should not 
be sold at prices exceeding by 4 s. per ton the prices which 
obtained there at corresponding dates in the tw^elve 
months preceding June 30, 19 14. The Board of Trade 
might in special circumstances increase the 4 s. The fine 
for violation of this provision should not exceed £100, 
or three times the amount which the seller might have 
received in excess of the maximum.^^ To the criticism 

27 Ibid., Jy. 21, p. 7; Jy- 22, p. 7. 

"Ibid., Jy. 15, p. 8; P. D. C, 191S, LXXIII, 1674. 



78 



WAR TIME CONTROL OF INDUSTRY 



that the bill penalized one great industry while allowing 
to others high war profits, Mr. Runciman replied that 
without it coal producers would have the market at their 
mercy. As for other industries, the excess profits tax 
would be heavy. Only with reluctance, however, did 
the House accept the principle of the bill, looking upon 
the measure as one of expediency. At the committee 
stage debate arose over an amendment to include within 
its provisions contracts of the summer made before its 
passage. June was the usual month for such transactions 
and the contractors who had bought then would, if not 
protected, be undersold to the extent of 3 s. by merchants 
who might buy in August. Mr. Runciman, opposing the 
amendment, declared that it struck at the root of all 
commercial stability. It was unfortunate, he admitted, 
that the bill had been delayed, but labour troubles in the 
coalfields were responsible for this. When the amend- 
ment was at length withdrawn, he accepted another, pro- 
viding that, if contract prices had been above those fixed 
by the bill, the contnact should not be invalid but should 
be subject to a reduction in the purchase price. 

Another amendment was concerned with retail prices 
in London, limiting them to a 15 s. advance upon the 
prices at the pit-head as fixed by the bill. On Mr. Runci- 
man's declaring that an attempt to fix a flat rate would 
be a disastrous failure, this too was withdrawn. He had 
already explained that London coal merchants were un- 
dertaking not to increase the price beyond a certain num- 
ber of shillings during the summer, and were prepared 



THE COAL MINES 



79 



to give a similar undertaking for the coming winter. 
He now added that to protect the poor from hawkers two 
hundred of the largest coal merchants in London would 
open depots where coal might be bought in small quan- 
tities at the price of the day.^^ The bill was passed by 
the House at the end of July and a month later the Board 
of Trade in a circular to the London coal merchants urged 
them to increase at once their stocks to the maximum. 
Thus the pits could be kept fully at work and demands 
upon transportation would later be reduced. H house- 
holders would store what they could, consumers without 
facilities could be supplied more easily in the winter.^^ 
Such were the preparations made by the Government 
in the summer of 19 15 for avoiding another winter of 
high prices, especially in London. It had embarked 
upon a career of price-fixing in the trade, and the follow- 
ing year it was carried further by the current. Although 
the Price of Coal Act in large measure protected home 
consumers, no limit had been set to prices which might 
be asked of foreign buyers. The Government's policy 
was to provide for home needs first, for those of the 
Allies next, for those of neutrals last. Licenses to ex- 
port coal to the Allies were for the most part easily pro- 
curable, but until May, 19 16, the price at which coal was 
sold them was very high. South Wales at times sold 
abroad low grade coals for 50 s. to 55s., although the 
Government by arrangement was buying better grades at 

29 p. D. C, 1915, LXXIII, 2186, 2187. 
80 B. T. J., Sept. 2, 1915, p. 669. 



8o WAR TIME CONTROL OF INDUSTRY 

less than one-half this amount. The colHeries which pro- 
duced the lower grades available for export reaped the 
highest profits, but all collieries realized on small coals, 
the price of which at times was los. per ton more thaii 
the authorities were paying for large coals. Early in 
1916 such heavy shipments of smalls were going to 
France that in view of the home shortage licenses were 
for a time held up.^^ 

Against conditions in the export trade France and 
Italy protested. Not only were the prices for coal very 
high but freights had l^ecome exorbitant. Rates to 
French and Italian ports compared with those of 1914 
were as follows : ^^ 

Marseilles T'' ^. 1?^'"^) ^^' 8/. d. 

Marseilles 85s. 6d. (May) lof 72 c 

Bordeaux 7^ f rMarrh^ Vi' \t 

Rouen ' ^ ^j uviarcn; 7 f . 30 c. 

^" 41S. 6d. (May) 6s. 3^4 d. 

In May, 1916, the Board of Trade put the needs of 
France before coal owners and shippers. The interests 
concerned co-operated cordially and scales of maximum 
coal prices and maximum freights were drawn up to be 
effective June i. Henceforth all orders from France for 
coal were to pass through one central office in Paris and 
were to be forwarded ultimately to the District Coal and 
Coke Committees in the various parts of the United 
Kmgdom. The Committees in turn undertook distribu- 
tion of the orders, supervision of their execution, and 

31 Iron and Coal Trades Review account of 1916 • L E Feb 17 
191 7, p. 329. ' » • /» 

32 Ibid. 



THE COAL MINES 



81 



arranging for shipments. Exporters saw their profits 
decrease but France was able to supply her furnaces and 
keep warm her homes at reasonable cost. Five months 
later the arrangements were extended to Italy, corres- 
ponding schedules being drawn up.^^ 

The passage of the Price of Coal (Limitation) Act in 
1915 and the setdement of the South Wales strike did 
not, as it turned out, establish permanendy either the 
price of coal for home use or the wages to be paid the 
miners. Since the supply of coal never kept pace with the 
demand for it, the Act did undoubtedly prevent abnor- 
mal prices. What might have happened is indicated by 
the course of the export trade. But it was felt in some 
quarters that the maximum fixed by the Act was too 
high, that the exclusion of contract coal from its pro- 
visions enhanced prices, and that middlemen were still 
free to increase their profits.^^ The probability that mid- 
dlemen were suffering litde was supported by reports like 
that of Messrs. Lambert Brothers, coal merchants, coal 
exporters, and shipowners in London and Cardiff. In 
the year 1914-15 they were able to distribute a divi- 
dend of 20 per cent, free of tax and in 1915-16 one of 
25 per cent. Since each year they put by a reserve equal 
to the dividends, the net profits during two years were 
90 per cent.^^ 

83 B. T J., May 15, 1916, p. 530; Je. i, p. 586; Oct. 26, p. 267. 

3*M. G., Sept. 30, 1916, p. 10 (editorial). 

35 M. G., Sept. 30, 191 6, p. 10. The net profits of this firm for a 
series of years were as follows: 1909-10, £39,000; 1910-11, £40,000; 
1911-12, £60,245; 1912-13, £106,476; 1913-14, £84,557; 1914-15, 
£142,548; 1915-16, £180,246. 



82 



WAR TIME CONTROL OF INDUSTRY 



II 



In July, 19 16, the inland prices allowed by the Board of 
Trade to the South Wales owners were further advanced 
2 s. 6d.,^^ a concession which seemed to some unwar- 
ranted.^^ The miners were displeased and, although 
their wages had been increased 15 per cent, in June, they 
demanded in November a new advance under threat of 
strike.^^ The Government, feeling that the output of 
coal should no longer be thus endangered, took an im- 
portant and decisive step. As from December i, 19 16, 
it took possession of the South Wales mines. Other 
motives than a desire to control the labour situation con- 
duced to this action. Lord Milner had already pro- 
posed that the mines be taken over as the railways had 
been. Neutral trade could the better be directed, since 
neutral ships stopping for British coal could be required 
to call on their return at specified ports.^^ It was further 
pointed out that fixing the price at the pit-mouth was not 
proving efficacious in protecting the consumer. To 
achieve this the wholesale and retail trade ought also 
to be under state control.^^ 

The Government embodied its newly taken resolution 
in a regulation added to the Defence of the Realm Act. 
This provided that any designated coal mines might pass 
into the possession of the Board of Trade and that the 
owners should thenceforth comply with the directions of 

8« L. E., Feb. 17, 1917. 
" M. G., Sept. 19, 1916 (editorial). 
'8L. T., Dec. I, 1916, pp. g, 10. 
38 M. G., Sept. 18, 1916, p. 4. 
*oibid., Sept. 19, Dec. 20 (editorials). 



THE COAL MINES 



83 



the Board as to the management and use of their mines."* ^ 
The Board at once appointed an Interdepartmental Com- 
mittee, representing the Board of Trade, the Home Of- 
fice, and the Admiralty, to advise with regard to ad- 
ministration, and to deal with outstanding questions as 
to the general rate of wages in the South Wales coal- 
field. Within a month it was decided to increase wages 
there by another 15 per cent.^^ 

On December 19, 19 16, Mr. Lloyd George, explaining 
the policy of the new Government, declared that state 
control would be extended to the entire mining industry. 
English and Scottish as well as Welsh miners favoured 
this extension, and were confirmed in their attitude after 
the premier assured a deputation from the Miners* Federa- 
tion that the measures contemplated would not be to the 
disadvantage of the workmen. By an Order in Council, 
February 22, 19 17, the Government took possession of 
the remaining coal mines of the United Kingdom as from 
March i, 1917. A new department was set up by the 
Board of Trade to administer the vast business, and Mr. 
Guy Calthrop became Controller of Coal Mines.*^ 

Immediately the new Controller undertook an investi- 
gation of the elements which entered into the market 
price of coal. There came to his notice instances of 
colliery companies charging London merchants prices 
which exceeded the limits prescribed by the Price of Coal 
Act. The intervention of factors, too, enhanced the 

*i Regulation of Nov. 29, 1916, D. R. M. 

*2 B. T. J., Dec. 7, 1916, p. 717; L T., Jan. 19, 1917. 

♦8L. T., Feb. 15, 1917; B. T. J., Mar. i, 1917, p. <5o8. 



!l 



84 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



85 



price. For these reasons many small merchants had had 
trouble in selling to the public at prices agreed upon. 
The Controller, therefore, at the beginning of April is- 
sued a notice requiring colliery companies to bring their 
prices into accord with the Price of Coal Act. Factors 
were instructed to revise their charges so that these in 
no case should exceed a provisional maximum of i s. 
6 d. per ton between colliery and distributor, no matter 
through how many factors' hands the coal might pass. 
Pending further investigation, arrangements were made 
for a reduction of i s. per ton in the prices advertised 
to the London public.^^ 

In September the Controller took advantage of the 
introduction of the Coal Transport Reorganization 
scheme '*^ to cancel all contracts for coal for inland con- 
sumption and to review colliery companies' and wholesale 
merchants' prices. Relative to the latter the Wholesale 
Coal Prices Order of September 5 was issued, specify- 
ing the maximum profit which factors and wholesale mer- 
chants would henceforth be allowed. To the pit-prices 
and transportation costs they might add 3 d. per ton for 
coal to be used fOr locomotives ; 6 d. for that needed for 
other railway purposes or in national factories; 9 d. for 
that consumed in making gas and electric supplies in 
Great Britain ; i s. for that sold to retail merchants in 
Great Britain for resale by them from depot or wharf or 
railway siding to consumers or to hawkers and small 

4* B. T. J., Apr. 5, 1917, p. 14. 
*^ Cf., above p. 12. 



I 



I 



F 



dealers ; i s. 3 d. for all other coal, including that sold for 
consumption in Ireland, except that 2 s. might be charged 
if the quantity was less than thirty tons and was sold 
from railway wagons to a consumer who had no rail 
or wharf accommodations but did provide cartage."*^ In 
general the provisional maximum of i s. 6 d. set in the 
spring had proved sufficient. 

As to maximum retail prices, no uniform schedule 
could be constructed. In different localities, colliery 
prices, transportation charges, local merchants' cost of 
distribution, all varied. Maximum retail prices should, 
therefore, it was ordered, be fixed by local authorities — 
in England and Wales by borough, urban district, and 
rural district councils, in Scotland by county and town 
councils, in Ireland by urban district councils, town com- 
missioners, and rural district councils. Retailers' net 
profits were prescribed as those of wholesalers had been. 
The profit for selling coal delivered by a road vehicle 
from depot, wharf, or si Jng in lots of one ton or more 
should not exceed i s. a ton, and if delivered at dealers' 
shops under certain circumstances should be 6 d. less than 
this charge; if the lot were less than one ton, the profit 
should not be at a rate of more than 2 s. a ton. A 
general rule for the guidance of local authorities was 
formulated. Investigation had shown that retail prices 
ought not to exceed those prevailing in the twelve months 
prior to the war by more than 7 s. 6 d. a ton, or 6 s. 6 d. 
if the district be near a colliery. If increases in price 

"L. T., Sept. 8, 191 7, p. 8. 



86 



WAR TIME CONTROL OF INDUSTRY 



did not exceed these limits, nothing should be done. If 
they did, the circumstances should be reported.^ ^ 

From prescribing the profits of wholesalers and re- 
tailers, the Government turned to the mineowners and 
the miners. To the South Wales owners it proposed 
that their profits should be those of 19 13, as were the 
profits of the railway companies; but the owners de- 
murred and pointed to their payment of super-taxes and 
their subscriptions to the war loans.'*^ At the annual 
July meeting of the shareholders of the Ebbw Vale Steel 
Iron and Coal Co. (Limited), a meeting at which a 
dividend of 15 per cent, less income tax was announced 
on the ordinary shares, one of the directors declared that 
the coal trade more than any other had " unhappily come 
under the blighting influence of governmental control." 
The Coal Controller had invited representatives of the 
various coalfields to meet him but deliberations had been 
held with all the secrecy of a Star Chamber, with all the 
ferocity of a Council of Ten. Recently he had sent to 
the chairman of each coal company the outline of a 
scheme under which 95 per cent, of the excess profits of 
the coal trade would be taken either by himself or by the 
Government. The speaker explained the trade's reliance 
upon " boom years." During the past twenty years he 
knew of no South Wales colliery of any standing which 
had " been able to pay a dividend of not less than 10 per 
cent, per annum," i.e., return to shareholders i s. per 

*'^ Ibid., Sept. 13, p. 8. 
*8L. T., Feb. 16, 1917. 



THE COAL MINES 



87 



ton on the output. *' Which goes to show how unfair 
it is to single out a particular trade for harsh treat- 
ment." ^» 

As the speaker said, a Committee of the Mining As- 
sociation of Great Britain had entered into negotiations 
with the Controller. Before an agreement was an- 
nounced, however, certain owners, feeling that the Com- 
mittee was going too far, took obstructive measures. 
Asking counsel's opinion on the question whether the 
Government had power to take over the mines without 
Act of Parliament, they were advised that it had not. 
Though contrary counsel could be quoted, the Govern- 
ment decided to proceed by statute. The autumn par- 
liament was, accordingly, asked to pass a bill legalizing 
the Government's action and sanctioning the agreement 
which had practically been reached on July 20th between 
the Controller and the Committee. By this Coal Mines 
Control Agreement (Combination) Bill every mine- 
owner acquires the right to make a claim upon the Coal 
Controller, if during any accounting period his profits 
are less than they were during the standard period. If, 
for example, a colliery with an output of 10,000 tons 
during a standard or pre-war period declines in output to 
9,000 tons during an accounting period of the same 
length, the owner becomes entitled to a profit on the basis 
of 9,250 tons. If, on the other hand, an owner's profits 
during the accounting period are in excess of his profits 
during the standard period, he is allowed to retain one- 

*»Ibid., Jy. 26, p. II. 



I ri I 



III 



i 



88 



WAR TIME CONTROL OF INDUSTRY 



fourth of the 20 per cent, of excess profits to which the 
Finance Act entitles him. The remaining 15 per cent, of 
excess profits goes to the creation of a fund to meet the 
payments due to owners whose profits have fallen off. 
If the fund should prove inadequate, Parliament will be 
asked to make good the deficiency. Although many mine- 
owners demurred at the surrender of the 15 per cent, 
excess profits, the majority of them eventually approved 
of the Government's proposals.^^ Thus a final adjustment 
between mineowners and the Government was reached 
only three years after a similar one had been made be- 
tween the Government and the owners of the railways. 

In the autumn of 191 7 the Government also came to 
terms with the miners. In July, the Miners' Federa- 
tion of Great Britain had held its annual conference at 
Glasgow. Addressing the representatives of 750,000 
workmen, Mr. Robert Smillie, President of the Federa- 
tion, referred to the Government's control of the mines. 
Since the mineowners were, it was understood, to be se- 
cured in their pre-war profits whatever the price of coal, 
the miners should be entitled to similar treatment. The 
question was at the time before the Coal Control Rates 
Board and might have to be raised in an acute form. 
The miners, having given the Government a pledge rela- 
tive to non-stoppage of work, would assist the Board, 
always, of course, short of compulsory arbitration. Al- 
though the miners were able to force an increase of 
wages they were not anxious to do so during the present 

^^L. T., Oct. II, 1917, p. 6; Nov. 9, p. 10. 



THE COAL MINES 



89 



crisis. It would be better that the cost of living should 
come down than that wages should go up. After a long 
discussion the Conference decided to make a " general 
demand for an increase of 25 per cent, on present earn- 
ings over the whole Federation area in view of the high 
cost of living." ^^ Acquiescence in this demand would 
involve, it was computed, the addition of one-half million 
pounds to the weekly wage bill of British collieries.''^ 

A week after the Glasgow Conference ended, some 
50,000 men of Lanarkshire held an " idle day " (August 
2) as a protest against profiteering and the increased 
price of foodstufifs and other necessaries. At noon in 
thirteen centres, mass meetings called for strong and 
speedy government action.^^ Before the end of the 
month the demand for an increase in wages was pre- 
sented by the Executive Committee of the Miners' Fed- 
eration to the Coal Controller. In the middle of Septem- 
ber Mr. Calthrop offered an advance of i s. a day to per- 
sons over 18, and 6 d. a day to those under 18. This of- 
fer being declined, the proposed advances were raised to 
I s. 3 d. and 7J4 d. respectively, but conditions were now 
attached. If the selling price of coal at the pit-head 
should be raised, this should not operate to secure a 
further wages advance under local conciliation board 
agreements, unless the increase warranted an advance 
greater than the present offer. If the cost of living 
should fall, there should be a corresponding reduction in 

51 Ibid., Jy. 25, p. 3- 

52 L. E., Jy. 28, 1917, p. 144- 

53 L. T., Aug. 3, 191 7, p. 3- 



lull* 



I 



nm 



90 



WAR TIME CONTROL OF INDUSTRY 



THE COAL MINES 



91 



the advance now to be made.^^ This offer too was re- 
jected, the Federation asking that the advance be i s. 
9 d. a day for persons over 16, 10 j^ d. for those under 
16. Next day, however, a compromise was accepted. 
Wages for workers over 16 and for those under 16 were 
to be increased by is. 6 d. and by 9 d. respectively. It 
was estimated that this advance would involve the pay- 
ment of an additional £20 million annually in miners* 
wages.^^ 

Having increased the miners' wages, the Government 
had to seek compensation by raising the price of coal at 
the mines, an advance eventually to be paid by the con- 
sumer. It the middle of October it was announced that, 
to meet the new expenditure, the pit-head price of coal 
would be increased by 2 s. 6 d. a ton. Coal sent to the 
Allies would not be affected. ^^ At the same time the 
provisions of the Price of Coal Act of 191 5 were modi- 
fied. The " standard amount," i. e., the amount by which 
the pit-head price of coal may exceed the prices which 
prevailed during the twelve months preceding June 30, 
19 14, had been fixed by the Act at 4 s. It was now, in 
the case of the mines of South Wales, Monmouthshire 
and the Forest of Dean, made 9 s. : elsewhere it should 
be 6 s. 6 d. or such lower sum as might be fixed by the 
Controller.^'' In this way the Government demonstrated 

" Ibid., Aug. 28, p. 3 ; Sept. 27, p. 3. 

55 Ibid., Sept. 28, p. 5. 

«6 Ibid., Oct. 13, p. 6. 

" Ibid., Oct. 16, p. 7- 



that increased expenditure for labour is necessarily re- 
flected in increased charges to the consumer. 

That the account of the activity into which the Gov- 
ernment was led through its attempts to limit the price of 
coal and satisfy the demands of the miners might be con- 
secutive, its endeavors since the summer of 19 15 to con- 
serve and increase the output of coal have been neglected. 
It will be remembered that at the very time of the South 
Wales strike in 191 5 a great meeting had been planned to 
rouse enthusiasm on this subject. On July 29, Mr. 
Lloyd George addressed more than 2,000 representatives 
of the coal-mining industry in the London Opera House. 
To repair the decline of 3,000,000 tons a month in produc- 
tion, the Government suggested that masters and men in 
the various coalfields consider jointly whether they could 
suspend the Eight Hours Act and other rules and customs 
established for the protection of labour. The Govern- 
ment in its turn was ready to pledge itself to restore the 
Act, rules, and customs when the danger was past. Mr. 
Robert Smillie replied that the miners might agree to a 
suspension of the Act, might even assent to a reduced age 
limit for boy workers and to the further employment of 
women ; but he hoped that these would be last steps and 
taken only if the need were vital. The conference passed 
a resolution that every effort should be made by owners 
and workmen to secure the greatest possible output of 
coal during the war.^^ 

B8 A. R., 1915, p. 149. 



92 



WAR TIME CONTROL OF INDUSTRY 



The better to organize the distribution and exportation 
of coal, the Board of Trade in February, 1916, on the 
nomination of various coalowners' associations, appointed 
eleven District Coal and Coke Supplies Committees. 
Upon them in the future lay the responsibility for seeing 
that the resources of their districts were utilized and that 
requirements for important industries and for households 
were met. To consider their recommendations for 
economy and for the distribution of coal and coke a 
Central Committee was set up. Upon it were placed 
representatives of all the government departments inter- 
ested in the coal question, and from it emanated decisions 
relative to the adjustment of home and foreign demand. 

A direct outcome of this desire to direct the supply of 
coal into the most important channels were the Priority 
Regulations of June 27, 1916."'^^ These provided that 
the Admiralty or the Army Council or the Minister of 
Munitions, after consultation with the Board of Trade, 
might give directions as to the priority to be given in the 
execution of orders or contracts for supplies of coal or 
Coke, with a view to securing precedence for orders or 
contracts in accordance with their national importance. 
To protect the contractor who had been directed to di- 
vert his coal in the national interest, the Board of Trade 
announced that such diversion would not expose him to 
legal measures if he was thereby forced to break a con- 
tract.^^ During the few months preceding, contractors 

50 2 D under the Defence of the Realm Act ; Cf., B. T. J., Je. 29, 
1916, p. 878. 
«oB. T. J., Jy. 6, 1916, p. 31. 



THE COAL MINES 



93 



k 



on the advice of the Central Coal and Coke Supplies Com- 
mittee had been inserting in their contracts a clause mak- 
ing the contract null and void so far as it prevented the 
fulfilment of government requirements.®^ This precau- 
tion now became unnecessary. 

Meanwhile the Government was carefully taking stock 
of its resources and on September i, 1916, some fifteen 
months after its first report, the Committee on output 
published a third report. The aspects of the earlier 
situation were reviewed in the light of added experience. 
Until the spring of 19 16 the total output of British coal 
mines had continued to decrease, but during the few 
months preceding the report improvement had set in. 
Up to the end of March the net decrease in the number 
of persons employed at the mines was 14.8 per cent., one 
per cent, greater than a year earlier. Measures, however, 
had by that time been taken and were still to be taken 
to check this wastage. On November 8, 191 5, the Home 
Secretary and the Director General of Recruiting had 
posted notices requiring any miner who enlisted to go 
back to work until called upon, his readiness to enlist 
being indicated by an armlet. Only a limited number 
of volunteers were accepted for tunnelling at the front. 
On June i, 19 16, more vigorous measures were taken. 
All miners in the home service units unfit for foreign 
service and such others as had entered the home units 
after August i, 191 5, were to be sent back to the mines. 
It was estimated that the number so returned would be 

«iL. E., Feb. 17, 191 7, P- 329- 



r 



m' 



94 WAR TIME CONTROL OF INDUSTRY 

from 15,000 to 16,000 and that their labour would in- 
crease the output of coal by 4,000,000 tons annually. At 
any rate the output did expand slightly, though the total 
for the second year of the war was again far below the 
normal. The production during three successive years 
was as follows: 

August, 1913-July, 1914 281,135,000 tons 

1914- ;; 1915 250,368,000 " 

1915- I9I6 250,748,000 " 

The Committee in its first report looked with hope 
toward the decrease of absenteeism, estimating that, if 
the 4.8 per cent, which was avoidable were eliminated, 
the output of coal would increase by 13,000,000 tons. 
The third report had to admit that no improvement was 
perceptible. In a final effort the Committee in April, 
1916, had induced the representatives of the Miners* 
Federation and of the Mining Association of Great Brit- 
ain to institute for every pit or colliery-group or district 
a committee to watch over and deal with absenteeism. 
On each committee the owners were usually represented 
by three members, the workmen by an unlimited number. 
By the end of August '' Absentee " committees existed 
in all districts except North Staffordshire, West York- 
shire, and some collieries of South Wales. Should the 
persuasive power of these new bodies prove ineffective, 
the situation, reflected the Committee somewhat gloomily, 
would have to be reviewed. 

More reassuring was the miners' relinquishment of a 
part of their holidays. The response during the year to 



THE COAL MINES 



95 



the Committee's representation regarding Christmas, 
New Year's, Easter, and Whitsuntide had been hearty, 
and normal holidays had been reduced by 50 per cent. 
The Committee was of the opinion that a further reduc- 
tion would be unwarranted and would increase absentee- 
ism. 

Although stoppage of recruiting and curtailment of 
holidays had done something to check the falling output, 
and the control of absenteeism might do more, the Com- 
mittee could not disguise the ominousness of the export 
statistics. In 1913 Great Britain exported 73^^ million 
tons of coal, in 1914 59 millions, in 191 5 43^2 millions. 
The third report ends with the same note as the first, only 
with increased emphasis. If legitimate requirements are 
fully to be met, economies must above all be practised in 
the consumption of coal.^^ 

At a National Conference of representatives of the 
coal mining industry on October 25, 1916, Mr. Asquith 
and Mr. Herbert Samuel embodied in their speeches the 
findings of this report. The diminished output, the dan- 
gerously low exportation, the persistence of avoidable 
absenteeism were set forth. To remedy the last the Con- 
ference passed a resolution pledging its best effort.^^ 

At the same time the National War Savings Com- 
mittee, co-operating with the Board of Trade, appealed 
for economy. Since coal was of supreme military value 
and no substantial increase in output could be expected 

«2 cd. 8345. 

«3 L. T., Oct. 26, 1916, p. 7. 



96 



WAR TIME CONTROL OF INDUSTRY 



bli 




during the coming winter, the exigency could best be 
met by householders restricting their purchases to the 
minimum. Especially could those householders help 
whose consumption was large and to whom one or two 
fires less would mean little. By a saving of one-tenth 
in fires and lights, the quantity of coal available could be 
increased by three or four million tons.^* 

The campaign for economy was continued in 19 17. 
To reduce the consumption of electricity, the linking-up 
of large electrical systems of England and Scotland was 
recommended by a Lancashire and Cheshire Committee. 
Despite the cost, coal would be saved and the price of 
the electricity could be reduced by the municipalities con- 
cerned.^5 It was suggested too that central power sta- 
tions could be set up near the principal collieries.^^ That 
water gas be substituted for or mixed with coal gas was 
recommended at the annual meeting of the Institution of 
Gas Engineers.^^ 

In June and July measures were taken to store up sup- 
plies in urban centres for the winter. Local authorities 
first in London and afterward in other municipalities 
were permitted to acquire stocks up to 1,000 tons for 
distribution to the poor. That access might be easy the 
stocks were placed in various depots, and a provision for 
sales of less than one hundredweight promised employ- 

«*M. G., Oct. 4, 1916. p. 6. 

«5 American Commerce Report, May i, 1917. 
«« Ibid. 

«^M. G., Je. 6, 1917. 



THE COAL MINES 



97 



ment to women in tending small scales. In general, 
however, it was felt that distribution could best be made 
by the merchants, and householders whose means per- 
mitted them to store coal before winter were urged to 
place their orders with them. The merchants in turn 
did their best to meet this early demand, delivering more 
coal than during the corresponding period of 1915.^^ 
Not only were efforts of this kind made to prevent diffi- 
culties of transportation in the winter, but the elaborate 
plan of the Controller, already described,^^ looked to- 
ward moving coal along direct routes from producing 
areas to the nearest consuming centres."^^ During May, 
June, and July the coal conveyed from the pit-mouth to 
London exceeded by 250,000 tons the quantity usually 
transported during these months, and a reserve of 70,000 
tons was created. It was expected that the reserve would 
be increased to 200,000 tons by the end of September 
and would be maintained above this amount during the 
autumn and winter. 

While much was thus done to ease the task of the rail- 
ways, the Coal Controller on August 10 took the final 
step and issued an order to limit the consumption of coal. 
By this Household Coal Distribution Order, 19 17, effec- 
tive August 17, London, the metropolitan area, and a 
number of districts outside were rationed. After Octo- 
ber I no one might buy for a dwelling house more than 

«8 L. T., Je. 26, 1917, p. 3 ; Jy- 14, p. 3. 

^^ Cf., above p. 12. 

70 L. T., Aug. 17, 1917, p. 3. 



I i 



98 



WAR TIME CONTROL OF INDUSTRY 



2 cwt. of coal a week for four rooms, more than 3 cwt. 
a week for five or six rooms, more than one ton monthly 
for seven rooms, more than 2^ cwt. for eight rooms, 
more than 27 cwt. for nine or ten rooms, more than a 
ton and one-half for eleven or twelve rooms, more than 
two tons for thirteen or fifteen rooms, more than two 
and one-half tons for fifteen or more rooms. This was 
to be the allowance from October i to March 31 ; from 
April I to September i, it would be reduced by one-half. 
Coke might be substituted for coal in the ratio of four to 
three; the anthracite allowance was two-thirds that of 
other coal. An additional allotment not exceeding 2 
cwt. a week might be granted a household in which 
through the presence of aged or invalid persons, children, 
or lodgers hardship would otherwise arise. 

To ensure this distribution, every metropolitan dealer 
in coal was required to take out a licence not later than 
September 20 registering the place where he dealt out 
coal. Local authorities were instructed to appoint local 
coal overseers who should report to the Controller on 
the facilities for storing and delivering coal within their 
respective districts and should provide for the safe cus- 
tody of any reserve stocks. No person might purchase 
more than 2 cwt. in any week without the consent of the 
local overseer, nor from October i to March 31 might he 
buy more than two tons at any one time. During the 
same six months not more than one ton might be de- 
livered monthly unless the registered merchant be in a 
position to fill all orders up to this amount during the 



THE COAL MINES 



99 



month or unless the customer present a priority order. 
Lastly, the Controller might from time to time determine 
the maximum price to consumers.*^^ The motive idea of 
the scheme, so cumbersome in the phrasing, was to guar- 
antee to each household of seven rooms or more at least 
one ton of coal a month and to smaller households a cor- 
respondingly smaller amount. Supervision was provided 
for and the Controller intimated that prices should not 
pass a certain point without his intervention. 

Immediately protest against the new scheme was made 
by the London Coal Merchants' Committee. At least a 
month beyond October i would be needed to fill the 
numerous orders now on hand — unless these were to 
be swept into the waste basket. If as much coal could 
be brought to London as the Controller indicated, the 
regulations were unnecessary. The scheme would in- 
volve the expenditure of additional money and labour. 
Tickets would require clerical work, and telephone orders, 
convenient as they are, would cease. The carrying of 
a reserve equivalent to five weeks' sales would tax mer- 
chants' docking facilities and leave them in the spring 
with a stock depreciated through exposure. Delivery of 
coal in rotation would bring difficulties of carriage. In 
his arrangements the Controller should have consulted 
the Merchants' Committee, a group of experienced men, 
and should have appointed them to carry out the scheme 
in the districts which should have been formed.^- 

71 L. T., Aug. 13, 1917, p. 4- 

72 L. T., Aug. 18, 1917, p. 8; Sept. i, p. 2. 



V 



lOO 



WAR TIME CONTROL OF INDUSTRY 



1 ) 



One concession the Controller made. The reserve 
necessarily kept was reduced to an amount three times 
the largest week's sales of the current year. On the 
other hand, it was stipulated that the reserve must be 
completed not later than November 30 and that, until it 
was assured, 25 per cent, of the coal received each week 
must be carried in stock.^^ 

By these regulations the Coal Controller took a final 
step in completing the system of state control. In pos- 
session of the mines and of the railways which carry 
their product, the actual employer of all labour con- 
cerned, the supervisor of all factors and merchants, the 
regulator of prices at every stage from producer to con- 
sumer, the Government now, in the populous Metro- 
politan area, became practically a distributor, telling 
citizens how much coal they might buy and under what 
conditions they might buy it. With reluctance it had 
entered upon these heavy administrative tasks. From 
the summer of 191 5, when a settlement of wages and 
prices first became imperative, to the autumn of 1916, 
when the taking over of the mines seemed advisable, it 
had been content with general and occasional regulations. 
During 1917, however, with the creation of a Coal Con- 
troller, wages, profits, prices, transportation, distribution 
had been closely supervised, and at the end of the year 
little was required to render the control as complete as a 
Socialist would desire. 

73 Ibid., Oct. IS. 



WOOL AND WOOLLENS 

In its negotiations regarding the railways, the coal 
mines, and the production of iron, steel, and munitions, 
the Government could for the most part neglect the outer 
world. The questions involved were largely domestic 
and the Government was master in its own house. To 
each, of course, there was a foreign side. The railways 
carried imported products from the ports inland, and the 
condition of foreign trade was reflected in the congestion 
of the docks; the decline in the output and exportation of 
coal created a situation serious for Allied buyers and 
for the British balance of trade; and the iron ore mined 
in England was insufficient to meet the demand, making 
necessary reliance upon Spanish ores. But apart from 
this last dependence, the situation in foreign countries 
did not obtrude itself to interfere with the Government's 
plans. 

Very different are the conditions now to be considered. 
For in regard to certain commodities Great Britain is de- 
pendent upon foreign sources of supply. The home out- 
put of wool and hides is of course considerable, but it is 
smaller than the imported product. Foodstuffs have to 
be imported in different proportions — meat consider- 
ably, wheat and flour extensively, sugar entirely. Cotton 
and tobacco are got only from abroad. Government con- 
trol of any of these commodities involves, therefore, the 

lOI 



II 



V 



I If 

, Hi 



HI 



m 



IHp 



1 02 



WAR TIME CONTROL OF INDUSTRY 



control of both the home and the imported supply, or of 
the latter in case this is the only one. If it be a question 
of price fixing, one source of supply may be easily dealt 
with, the other may give much trouble. If there be only 
the imported product, the Government may be able to 
take this readily into its own hands. 

Another feature of situations of this kind is the need 
of maintaining the supply of the commodity in question. 
Since the home product is at best insufficient, the foreign 
supply will always be the Government's chief concern. 
If in the foreign supply there be for some reason a world 
shortage, the state may have to enter the world market 
as purchaser. Such crises have arisen relative to wool, 
hides, and many articles of food. If, on the other hand, 
the supply is comparatively abundant or the commodity 
relatively unessential, the state may safely leave importa- 
tion and purchase in private hands. So it has done with 
cotton and tobacco, commodities which have been af- 
fected by government control only in their consumption. 

From the beginning of the war the Government has 
been concerned to maintain in the country an adequate 
supply of wool. Not only was this in order that civilian 
needs might be met but also that the men of the army and 
navy might be clothed. In the spring of 1916 the latter 
responsibility brought the Government face to face with 
rising costs, and in the interests of the Exchequer it began 
to fix prices. The double endeavour to secure adequate 
supplies and to keep them at a reasonable price has led 
to a wide-reaching control of the woollen industry. 



fl 



WOOL AND WOOLLENS 



103 



To maintain supplies during the first year and a half 
of the war was not difficult, and up to the beginning of 
19 1 6 the supply of raw wool was in general abundant. 
The reasons for this lay in world conditions. At the 
beginning of the war, the cessation of a large part of the 
Continental demand for wool left on the market a surplus, 
much of which was attracted to the United Kingdom. 
Nine hundred million pounds were retained in the country 
during 19 15, although the average annual pre-war con- 
sumption had been only five hundred and fifty million 
pounds.^ It would seem that the Government need not 
have troubled itself to conserve supplies, but for a time 
extreme caution was shown. 

At the outbreak of the war the woollen trade for a 
short time suffered from the wide-spread paralysis of 
industry. The September London sales, at which some 
120,000 bales of wool are normally disposed of, had to 
be postponed for a week and then only 50,000 bales were 
offered. The market, however, proved unexpectedly 
strong; 43,000 bales were sold and prices maintained.^ 
Soon government orders began to come in and the crisis 
was past. In three months the demand for wool ro3e 
20 per cent. Steadily government needs increased until 
in 191 7 they closely approached the total pre-war con- 
sumption of the United Kingdom. In March of that 

1 Cd. 8447, p. 13. Memorandum on War Office Contracts. A 
paper handed in to the Committee on Public Accounts by Mr. N. F. 
Wintour, Director of Army Contracts, Je. 7, 1917, P- I3- From this 
excellent report much of the following account is drawn. 

2 B. T. R., Oct. I, 1914, p. 204 ; Nov. 2, p. 255. 



m 



' * 



ii' 



I- I 



I 



i:* 



IR I 




104 



WAR TIME CONTROL OF INDUSTRY 



year Mr. Forster told the Commons that the army an- 
nually requires 105,000,000 yards of khaki and 115,000,- 
000 yards of flannel — '' enough to go four and a half 
times round the earth at the equator/' ^ 

Foreseeing its requirements, the Government, despite 
the large quantities of wool coming into the country in 
the autumn of 19 14, put restrictions upon the export of 
certain kinds of wool and cloth. Licences from the 
Board of Trade were required for any exportation. If 
a cloth were unsuitable for army purposes, the licence 
was readily granted; if suitable, a licence was refused 
unless the cloth were for the military purposes of the 
Dominions. As for wool, the exportation of merino 
from England or the Colonies was to a considerable ex- 
tent permitted, but not that of crossbred, more suitable 
for making army cloths, except that at times this was 
allowed to go to the Allies.^ Notwithstanding the partial 
embargo, the home market during the winter was ill- 
supplied owing in a measure to delays in railway trans- 
portation.^ At the same time the exportation of Aus- 
tralian wool to America was forbidden by the Australian 
Government, there being a suspicion that, thus supplied, 
America was managing to get a part of her own clip to 
Germany. With the inclusion of wool in the list of con- 
traband in March, this situation cleared up and American 
buying in the Colonies was again permitted.® 

sCd. 8447, p. 13; P. D. C, 1917, XC, 2192. 
* B. T. J., Nov. 19, 1914, p. 494 ; Dec. 10, p. 693. 
6B. T. R., Feb. i, 1915, p. 82. 
6 Ibid., Mar. i, p. 145; Apr. i, p. 211. 



WOOL AND WOOLLENS 



105 



In the summer of 191 5 the Government, having ac- 
cumulated extensive stocks, could afford to relax restric- 
tions upon exports. The country had even become em- 
barrassed by its surplus supply both financially and in 
the matter of storage. Merinos were, therefore, ex- 
ported still more freely; crossbreds, already going to 
France, were released for other Allies and for Norway 
and Denmark, an embargo on 125,000 bales of them be- 
ing raised ; ^ East India wool might go to the United 
States. Crossbred tops were sent more liberally than 
before to the Allies and, under satisfactory guarantees, 
to neutrals.^ The year ended with handsome profits for 
home manufacturers, even the fancy houses prospering, 
while carpet makers shared in orders for blankets and 
military webbings.^ 

Nineteen hundred sixteen brought with it a shortage 
in the world's supply of wool, the effects of which were 
to be far-reaching. For a time the stocks carried over 
in England from 19 15 obscured the situation, but later 
it became apparent that the world's production had fallen 
off 20 per cent., or 300 million pounds. A serious 
drought in Australia during 19 14-15 had reduced sheep 
flocks from 82 million head to 69 million; cattle raising 
and wheat growing were successfully competing with the 
production of wool in South America. To intensify the 
scarcity in Europe, Japanese buying increased and the 

7 Ibid., Sept. I, p. 174; Oct. i, p. 212. 

8 B. T. J., Oct. 21, 1915, p. 173. 

» Weekly Rec, Jan. 25, 1916; Annual Fin. and Com. Review, 
Jan. 21, 1916. 



io6 



WAR TIME CONTROL OF INDUSTRY 



I '■ 



United States began to acquire wool on an unprecedented 
scale. Just before the war American import duties on 
wool had been removed and war prosperity now gave in- 
creased purchasing power. In the 1915-16 season, the 
United States' purchases in Colonial wool markets were 
nearly ten times greater than the average purchases of 
the three years preceding the war, amounting to almost 
20 per cent, of the world's clip. It was estimated, too, 
that during 1914-15 and 1915-16, 100 million pounds 
of wool were purchased in South American markets on 
German account for post-war trade. ^^ There was a 
feeling in the British wool trade that, although the con- 
suming power of the United States was great, large 
purchases there had been speculative, made in the hope 
of reselling to Germany after the war.^^ The following 
table shows the changes in production, consumption, and 
price which occurred during three years of the war.^^ 
The Australasian and Cape production is about 70 per 
cent, of the world's exportable wool.^^ 



WOOL AND WOOLLENS 



107 



Exports to Europe 
and America (in 
bales) 



Average 
value 
per 
bale 



Consumption (in bales) 



Imported 

into 
England 



Australasian Cape 

1913 2,296,000 484,000 £ 16^ 

1914 2,33-2.000 499,000 17 

1915 2,157,000 519,000 19 

1916 1,919,000 500,000 27 



English Continental American 

1,043,000 1,675,000 54,000 1,646,000 

968,000 1,689.000 169,000 1,601,000 

1,923,000 212,000 551,000 2,171,000 

1,384 000 273,000 720,000 1,496,000 



By the beginning of 1916 prices in Great Britain re- 
flected the coming scarcity. According to the quality 

10 Cd. 8447. p. 13. 

11 B. T. R., Feb. i, 1916, p. 62. 

12 L. E., Feb. 17, 1917, pp. 313-314. 

13 M. G., Dec. 29, 1916. 



of the wool the advance was from 40 per cent, to 100 per 
cent. It was stimulated by the purchases of merchants 
and manufacturers anxious to protect themselves against 
the persistent rise, and by the activity of speculators out- 
side the wool trade but attracted to it by the profits real- 
ized. British and Allied demand for the finished product 
contributed. The increased prosperity of the working 
classes made them better buyers ; the War Office was plac- 
ing very large orders ; and for a time the Allies competed 
with the Government. The last factor was at length 
eliminated by the placing of all Allied orders through the 
Army Contracts Department, but the other factors re- 
mained. 

The Government now became concerned for its own 
purchases. Restrictions were again placed upon exports. 
Although limited quantities of merino wool were for a 
time allowed to go to European neutrals,^* no licences 
whatever for America could be got in London. A month 
or two later all neutral purchases, first of crossbreds then 
of merinos, were barred.^^ 

Under normal conditions the Government had pre- 
ferred to do its buying through competitive tendering; 
but its rivalry with the civilian and export trades was 
making this impossible save at exorbitant prices. Even 
when manufacturers w^ere willing to forego high profits 
on war work, their competitors in the civil trade could 
offer higher wages to labour and could outbid them for 

1* B. T. J., Apr. 13, 1916, p. 82. 
15 L. E., Feb. 17, 1917, p. 312. 



I \ 



io8 



WAR TIME CONTROL OF INDUSTRY 



raw material. The Government's first plan under these 
circumstances was to requisition the output of factories, 
paying the manufacturer the cost of production and a 
reasonable profit. An Order in Council of February 15, 
19 1 6, bestowed upon the War Office power to do this, 
together with authority to require manufacturers to fur- 
nish information as to output, cost of production, and 
profit. A census of machinery, labour, productive capac- 
ity, and stocks of raw material was accordingly taken. 
World movements of supplies and prices were investi- 
gated. War Office accountants examined the books of 
typical firms to ascertain '' costings." Committees from 
sections of the trade and trade experts appointed to be 
'officers of the Army Contracts Department worked over 
conversion costs at the various stages of manufacture. 

The results were unsatisfactory. Owing to the excited 
state of the raw wool market and the varying prices at 
which manufacturers had purchased raw material, the 
market prices of the day had to be taken as the basis for 
costings. With a rising market the advantage was al- 
ways with the manufacturers, always against the Depart- 
ment. To attain a satisfactory system of costings, con- 
trol of the raw material was essential ; and the necessity 
of securing adequate supplies made it desirable as well.^^ 

For these reasons, the Department in May, 19 16, de- 
cided to take over the clip of the United Kingdom, the 
wool being crossbred and in the main suitable for military 
purposes. On June 8 dealings in wool grown on sheep 

i« Cd. 8447, p. 13. 



WOOL AND WOOLLENS 



109 



in the United Kingdom during the season of 19 16 were 
forbidden. ^^ The prices to be paid to British growers 
were, after much consideration, agreed upon as those 
ruling in July, 19 14, increased by 35 per cent., an estimate 
of the increased cost of production. The Government 
had at first offered an increase of 30 per cent, but the 
farmers stood out for the higher figure.^« Throughout 
Great Britain the normal machinery of the trade was, as 
far as possible, utilized in carrying out the transaction. 
Merchants, authorized by the Department and paid in 
proportion to the weight of the wool which they handled, 
did the buying, supervised in each of several districts 
by experienced buyers who had been appointed Deputy 
Executive Officers. The wool thus acquired was taken 
to a huge clearing house at Bradford, where it was graded 
and finally valued. In Ireland the established dealers, 
who buy from farmers, store keepers, and others, were 
asked to make the purchase on commission, and a fixed 
schedule of prices was drawn up for them by the Gov- 
ernment. The total cost of the 19 16 clip was estimated 
at from £7,500,000 to £8,000,000.^^ 

Considerable dissatisfaction was expressed in Parlia- 
ment in November at the methods adopted in taking over 
the wool. Mr. Prothero, soon to be Minister of Agri- 
culture, declared, ** You could not have had that purchase 
carried out in a way that would have given more dis- 

17 B. T. J., Je. 15, 1916, p. 730. 

18 B. T. R., Aug. I, 1916, p. 77- 

i»Cd. 8447, p. 14; B. T. J, Jy. 27, 1916, p. 233. 



no 



WAR TIME CONTROL OF INDUSTRY 



content to the agricultural community." In two respects 
there had been a loss to the nation. The wool was left 
in places where it deteriorated in quality; and because 
it was not paid for promptly farmers had been obliged to 
sell their catde before the latter were fit for the butcher. 
Mr. Bentham compared the dilatoriness of the Govern- 
ment with the promptness always shown by the private 
buyer, who paid on the spot. Sir John Spear asserted 
that the prices received would not be really 35 per cent, 
in advance of those of June and July, 1914. It had been 
understood that the wool would be taken in bulk as had 
always been the case; but a system of grading was intro- 
duced which made marked differences. A Devon farmer 
had proved that he received £14 less than the price prom- 
ised by the Government. ^^ 

Whether satisfactorily or not, the clip of the United 
Kingdom was appropriated by the end of the year; but 
this clip constituted only one-ninth of the British con- 
sumption of wool in 19 1 5. It was highly desirable, 
therefore, that action be taken to secure the Australasian 
clip, which amounted to one-half of the world's exporta- 
ble crossbred and merino. During the season of 19 15-16 
the Australasian Governments, at the request of the home 
Government, had placed an embargo on the exportation 
of wool to other than Allied countries. Despite this 
America had acquired almost 25 per cent, of their clip, 
the embargo proving intermittent. To assure itself of 
supplies, the home Government now proposed to the two 

20 p. D. C, 1916, LXXXVIT. 878, 870-871 ; 932, 1232. 



WOOL AND WOOLLENS 



III 



Colonial Governments the purchase of all their crossbred 
wool in 1916-17, about two-fifths of their clip. To this 
proposal they answered that it would be impracticable 
to discriminate between growers and users of different 
kinds of wool and offered to sell the entire clip. After 
considerable discussion, the home Government in Novem- 
ber, 19 16, accepted the offer. A proposal to purchase the 
South African clip also was discussed but rejected, since 
the quality of the wool blended less well for army pur- 
poses. As it was, the Government's action was adversely 
criticized by some sections of the trade and declared un- 
necessary. 

Before the purchase was arranged, one-fourth of the 
Australasian clip had been sold at public auction. So 
far as these sales were on British or Allied account, the 
wool was allowed to go forward. As for the remainder 
of the clip, about 500 million pounds, the Governments of 
Australia and New Zealand were to act as sole agents of 
the British Government. Wool required by local manu- 
facturers was unaffected. The prices to be paid were 
55 per cent, above the average 1913-14 prices realized 
by growers in Australia, and worked out at about 15^2 d. 
per pound greasy wool. Should the home Government 
realize any profit on its sales, this was to be shared with 
the Colonial Governments. The cost was appraised at 
£22 millions for the balance of the Australian clip, at 
£13 millions for the clip of New Zealand.^^ Although 
the South African clip was not purchased, an Order in 

21 Cd. 8447, p. 14. 



112 



WAR TIME CONTROL OF INDUSTRY 



Council of April, 191 7, announced that any imported 
wool must first be offered for sale to the Director of 
Army Contracts. Thus, in one way or another, most of 
the raw wool of the Empire, or about 70 per cent, of the 
world's exportable supply, came under state control. 

The distribution of the wool acquired by the Govern- 
ment now became a matter of great concern to the trade. 
The British clip had been apportioned through selected 
firms of wool merchants to manufacturers who supplied 
the Government's military needs. Any surplus not 
needed by Great Britain or the Allies was sold by auction 
at unreported prices. Brokers had suffered somewhat, 
but 19 16 had not been an unprofitable year for manufac- 
turers. New trade rules, such as shorter credit periods 
and a standard measure (38 inches to the yard), had been 
adopted.22 Above all, the careful placing of Govern- 
ment orders, as well as large ones from Russia, in such 
way as to keep factories steadily running had conduced 
to prosperity. ^^ There were, to be sure, complaints from 
worsted manufacturers that the prices allowed them on 
Government purchases could be accepted only through 
patriotic motives ; but fine worsteds were in demand from 
neutral countries, which were undeterred by high prices. ^^ 

In December, 19 16, however, consternation ruled 
among Bradford and London brokers; for it was an- 
nounced that the Government would suspend the London 
auction sales of wool. A deputation of the trade waited 

22 L. T., Jan. 19, IQ17, p. 8; M. G., Dec. 28, 1916, p. 6. 

23 M, G., Nov. 22, 1916, p. 9. 

24 Ibid., Dec. 13, p. 9. 



WOOL AND WOOLLENS 



113 



upon the Financial Secretary of the War Office to urge 
that the sales be continued. They were told that the 
Government would deliver the wool for military purposes 
directly to users and that the remainder would not neces- 
sarily be sold at auction. During the last twenty years 
wool so sold had decreased from 70 per cent, to 30 per 
cent, of that imported ; most wool now went directly from 
the Colonies to the manufacturers.^^ After consultation 
with experts, the Government decided to send such wool 
as could be easily graded directly to the contractors, and 
to have such as was suitable for top-making combed into 
tops on commission for the Department and sold in that 
form at fixed prices. Since it was desired to exercise 
priority as to the use of all wool, sale to the highest bid- 
der at auction, regardless of the use which he might make 
of his purchase, was impossible. Hence, although it was 
arranged that distribution should in the future as in the 
past take place in the public auction rooms, no bidding 
was allowed. Wool was allotted by the London Wool 
Selling Brokers' Association at fixed prices to approved 
users in accordance with their requirements.^^ As to 
priority, after the Government's own contractors, pre- 
ference was given to manufacturers for the export trade. 
In 19 1 6 this had been 10 per cent, of the country's total 
exportation of manufactured products and had rendered 
great service in helping pay for imports. ^^ 

25 M. G., Nov. 28, 1916, p. 9; Dec. 29. 

26 Cd. 8447, p. 15. 

27 M. G., Dec. 29, 1916. 



»^i 



114 



WAR TIME CONTROL OF INDUSTRY 



•I 



The prices at which wool was to be sold by the Govern- 
ment were fixed at two hvels and the situation created is 
as follows. If a Depaitment contract is in question, the 
price is based on the cost, plus a margin for administra- 
tive and other charges. The Allies, too, may buy wool 
for military purposes at this price on the understanding 
that any economy realized will accrue to the Govern- 
ment concerned. If the wool sold be for civilian use, the 
price is that of January, 1917, originally 20 per cent, 
above the military-issue price. The divergence arises 
from the fact that the Government in initiating its sales 
in January would have disorganized the trade had it sold 
at 20 per cent, below market prices. Merchants and 
manufacturers had already made purchases on the as- 
sumption that there would be no interference with the 
civilian trade. It was best for the Department to take a 
profit. 

The determination of the prices which should be paid 
to manufacturers for Government work was a more com- 
plicated matter. In the spring of 19 16 the prices had 
baffled accountants, because the cost of the raw material 
was unstable. Under the new conditions technical ex- 
perts of the Department again set to work on conversion 
costs, i. e., the costs of converting wool from one stage 
of manufacture to the next. Difficulties in ascertaining 
these arise from the shrinkage or wastage of wool as it is 
changed into finished cloth and from the number of pro- 
cesses which it undergoes, the profit on each conversion 
being extremely small. Despite the difficulties, success 



WOOL AND WOOLLENS 



115 



now attended the Department's efforts. In the case, for 
example, of serge drab-mixture cloth, conversion costs 
and shrinkage were arrived at which reduced a competi- 
tive price of 8 s. 3 d. per yard to 7 s. The saving was 
£20,000 weekly. Conversion costs and shrinkage once 
ascertained, the manufacturer was allowed a price based 
on these, on the cost of the raw wool, and on pre-war 
rates of profit, which averaged about 5 per cent. On this 
basis the Department estimated that its yearly saving on 
orders for cloth and hosiery would be about £3,700,000.28 
Other advantages secured by the Government's pur- 
chase and sale of all native and Australasian wool at 
fixed prices can be less exactly stated but are unques- 
tionable. In the first place, manufacturers in the civil 
trade were benefited by getting wool at a steady price 
for a certain period ahead and at one which has been 5 
per cent, or 10 per cent, below more recent world market 
prices. How much the price of wool would have risen 
in 1917 without the Government's action is of course 
hypothetical. During the previous year crossbreds had 
gone up 30 per cent., merinos 50 per cent. If it be as- 
sumed that the further advance would have been no more 
than 10 per cent., the Government's saving on that part 
of the Colonial clip required for military purposes was 
£2,500,000. 

Further economies have accrued to the Government 
and, in a measure, to the community, from the technical 
knowledge of expert advisors. In the spring of 19 16 

28 Cd. 8447, p. 16. 



"*#! 



w B 



IM 



ii6 



WAR TIME CONTROL OF INDUSTRY 



the salvage of old uniforms began, and within a year 
5,000 tons of worn khaki were turned into shoddy. In 
November the Department, taking note of the remnants 
of cloths issued for the making of shirts and of dress 
clothing, announced that it would take possession of them 
henceforth. ^^ By the skilful use of wool waste, noils, 
and rags it appeared that cloth could be made of as 
great durability, warmth, and strength as similar cloths 
made entirely from wool and that it could be produced 
at a greatly reduced cost. Experts with special knowl- 
edge and experience in blending wool and wool-wastes 
became officers of the Department and thenceforth in- 
structed manufacturers in the new art. Particularly 
happy was the application of the process to the making 
of greatcoating cloth. Where 10 s. or 10 s. 6 d. per yard 
had been paid for this material, its cost was now reduced 
to 9 s. Manufacturers of it were given full information 
of the particular blend secured and the entire trade 
profited by the innovation.^^ In the summer of 19 17 
there was experimenting in the use of smaller spun 
worsted yarns and of mungo. Drab serge, it was pro- 
posed, should be made either out of 2-2 1's or 2-24's with 
the woollen weft of 50 per cent, pure wool and 50 per 
cent, mungo. The cloth produced would be wearable 
and would be of excellent heat-retaining quality. Indeed, 
Bradford cords made as officers' cloths independently of 
the War Office already contained a far larger percentage 

29 D. R. M., 3rd ed., p. 178. 

30 Cd. 8447, pp. 15, 16. 



WOOL AND WOOLLENS 



117 



of mungo than the Bradford cords required by the War 
Office.3^ Accordingly, the trade was ready to support 
the Government in the utilization of substitutes for wool, 
the more readily as such action promised a great expan- 
sion in output. 

The Government's success in administering the woollen 
industry necessarily depends in large measure upon the 
Committees, representative of the trade or of the districts 
concerned, which have been set up to assist it. Of these 
there are several. In the matter of the purchase of the 
home clip advice is given by a Central Committee on the 
Purchase of British Wool and complaints from farmers 
come in through District Committees.^^ Qther District 
Committees, twelve in number, allocate contracts among 
manufacturers, and their chairmen compose a Central 
Advisory Committee on the Allocation of Contracts. 
The contracts which they apportion are first passed upon 
by a War Department Cloth Office, set up at Bradford 
and comprising a large number of business men from the 
trade, each a specialist in his department. The Bradford 
Office is in close touch with the Contracts' Department 
in London, and through it the latter has attempted to in- 
troduce self-government in the allocation of contracts. 
Beside these administrative advisory bodies there is an- 
other which may be called legislative, the Central Wool 
Advisory Committee. Resulting from an amalgamation 
of several small committees which advised the Govem- 

81 L. E., Aug. 4, 1917, p- 194. 
32 B. T. J., Aug. 24, 1916, p. 550. 



ii8 



WAR TIME CONTROL OF INDUSTRY 



WOOL AND WOOLLENS 



119 



ment in December, 19 16, when the purchase of the Aus- 
tralasian cHp and the distribution of it were under con- 
sideration, this body gives advice on questions of general 
policy. On it are representatives of all sections of the 
trade from importing wool houses to exporting cloth 
merchants, and labour is also represented.^^ In the spring 
of 1917, it made irfiportant recommendations, the adop- 
tion of which embarked the Government on a new policy 
leading in turn to the creation of a new board. 

The new policy, and one not confined to the woollen 
industry, was that of very carefully conserving supplies, 
even to the extent of rationing manufacturers or con- 
sumers. It was induced by the serious state of the na- 
tion's shipping, and it was to reach to many commodities 
which are imported in large quantities. On April 19, 
1917, the Central Wool Advisory Committee recom- 
mended to the Government that it be applied to the manu- 
facture of woollens and worsteds. Owing to the existing 
wool situation and the heavy military needs, the Com- 
mittee explained, there should be accumulated a consider- 
able reserve of wool. To achieve this and, as far as pos- 
sible, to maintain the export trade, production for home 
consumption should be curtailed. This could best be 
brought about by applying the priority scheme already 
worked out by a committee of manufacturers and mer- 
chants appointed by the Army Council. Substitutes for 
wool should, as far as possible, be used in the civil trade. 
As precautionary measures, no distribution of Govem- 

" Cd. 8447. pp. 15, 23. 



ment wool or tops should take place until after the end 
of May; manufacturers and spinners should be warned 
that their use of present stocks would affect future alloca- 
tions; and drastic action should be threatened if manufac- 
turers and traders attempted to exploit the curtailment by 
increasing the prices of materials in stock.^^ 

These recommendations meant the pushing of the 
priority scheme until manufacturers were rationed in 
their production for home civilian needs. The scheme 
in question, first applied to munitions of war,^^ was ex- 
tended in full measure to woollen and worsted goods by 
an order of the Army Council on April 14, 1917.^^ In 
this order it was provided that all manufacturers of such 
goods should give priority to contracts according to a 
rating of these as of Class A, Class B, or Class C. Class 
A comprised all military orders of Great Britain or the 
Allies; Class B, orders for goods destined for export and 
other orders approved by the Director of Army Contracts 
as being for work of national importance ; Class C, orders 
looking toward the supply of civilian needs.^"^ 

A deferring of orders of Class C by manufacturers 
until orders of the other two classes were filled would 
have been the normal outcome of this scheme. So it had 
been with priority in the products of iron and steel. 

3* B. T. J., Apr. 26, 1917. 

35 Cf., above p. 43. 

36 In Oct., 1916, the Army Council had ordered that in all fac- 
tories, the business of which was wholly or partly the making of 
worsted or woollen goods, priority should be given to Government 
orders ; B. T. J., Oct. 26, 1916, p. 269. 

37 B. T. J., Apr. 26, 1917. 



I20 



WAR TIME CONTROL OF INDUSTRY 



Actual rejection or disregard of orders of Class C might, 
however, be necessitated if the manufacturer were obliged 
to curtail the working hours of his factory or if he should 
have only a limited amount of raw material to work 
upon. In the woollen industry the Government created 
both these conditions. 

Again it was the Central Advisory Committee that on 
May 17, after further consideration of the situation, 
recommended the measures embodied in an order of the 
Army Council on May 24. To avoid an almost inevita- 
ble drastic curtailment of hours of employment in the 
winter months, the order provided for the immediate 
reduction of weekly hours by 20 per cent., or from 55^ 
to 45. It further provided that another group of com- 
mittees, six District Priority Committees with a Central 
Committee in London, should lay down the conditions 
under which crossbred wool or tops might be used after 
June II and merino wool or tops after July 2, and should 
in addition ration out to manufacturers, spinners, and 
others in their respective districts such supplies of wool 
as might be available for civilian consumption.^^ 

Curtailment of supplies of raw material and limitation 
of production were thus decreed. The Yorkshire Post 
estimated that, while one-half of the machinery in the 
wool-using trades would be engaged in military work, 
two-thirds of the other half of it, devoted to the civilian 
trade at home or abroad, would become idle.^^ No 

S8L. T., May 25, 1917, P- 3 ; B. T. J., May 31, p. 469. 
" U. S. Commerce Reports, Jy. 3, 1917. 



» 



WOOL AND WOOLLENS 



121 



fears, however, were entertained of an immediate short- 
age in civilian cloths, with which many of the larger 
houses were well stocked.*^ But when spinners got from 
the District Priority Committees their June, July, and 
August allotments for the civilian trade, many of them 
found that in one month they had consumed more than 
the allotment gave them for three. It was pointed out 
that the allocation, which in general was about 60 per 
cent, of the amount applied for, was in many cases in- 
sufficient to enable the machinery to run the full 45 hours 
to which working time had been reduced. Rather than 
stop it spinners had used what stocks they possessed re- 
gardless of whether this was authorized or not.*^ To 
appease discontent Mr. H. W. Forster, M. P., Financial 
Secretary to the War Office, addressed a large meeting 
of traders at Bradford, giving the statistics of stocks of 
wool on hand and of prospective imports upon which the 
Department had based its restrictive policy. At once 
the accuracy of the figures was challenged and the out- 
come of the discussion was the appointment of a Com- 
mittee to confer with the Department regarding them.*^ 
Meanwhile the Government's administration was fur- 
ther criticized. A newly formed Wool Textile Associa- 
tion of the United Kingdom, through its executive com- 
mittee, demanded that the w^ool-control scheme in matters 
of policy and administration be taken out of the hands 
of officials and be turned over to a board of practical men 

*o M. G,, May 9, 1917, p. 7 ; Weekly Record, May i. 
*iL. T., Jy. 3, 1917, p. 13; Jy. 13, p. 13; Aug. 4, p. 194. 
*2 L. E., Jy. 28, 1917, p. 145. 



122 



WAR TIME CONTROL OF INDUSTRY 



like the boards set up for the cotton and shipping trades.*^ 
To this demand the Department in a measure acceded. 
Ahhough it would make no change in Committees dealing 
with the purchase and distribution of raw wool, retaining 
in particular the Central Wool Advisory Committee, and 
although it would reserve for itself the ultimate decision 
regarding prices, the necessary reserve of wool, and the 
allocation of Government contracts, it proposed to re- 
place the Priority Committees by a Board of Control 
sitting at Bradford. This Board, upon which an equal 
number of representatives of employers and of employes 
should sit beside certain representatives of the Depart- 
ment under the chairmanship of Mr. Charles Sykes, 
would deal with questions affecting the manufacture of 
woollens and worsteds and would have a free hand re- 
garding civilian production. Mr. Forster claimed that 
the scheme embodied the essence of partnership and was 
an honest attempt to give the trade the fullest measure 
of control compatible with the ultimate responsibility of 
which the Government could not divest itself.^^ 

In some quarters the proposed Board was regarded 
with satisfaction, but the Executive Committee of the 
Wool Textile Association found it inadequate. At a 
meeting in London this Committee requested that the 
Board be given control of the entire industry from the 
raw material to the finished product, that business men 
representative of all branches of the trade throughout 

*3 Ibid. 

**Ibid., Aug. II, p. 231. 



WOOL AND WOOLLENS 



123 



the United Kingdom constitute not less than one-half 
its membership, and that it be nominated by the trade and 
elect its own chairman.^^ Such proposals looked toward 
a reduced representation of the Department and of la- 
bour upon the Board, while they greatly increased its 
functions. 

For a month negotiations went on, until Mr. Forster 
strongly urged a settlement on the ground that govern- 
ment supplies were low and the situation serious.^^ At 
length in September the constitution and functions of the 
new " Board of Control of the Woollen and Worsted In- 
dustries " were definitely announced. The Board should 
comprise not more than eleven men nominated by the 
Army Council, of whom at least seven should be experts 
responsible for placing orders for Government supplies, 
not more than eleven representatives of employers, and 
not more than eleven representatives of employes; the 
chairman of the Board should be the Director of Wool 
Textile Production. Certain functions were withheld. 
The Army Council was still to determine the amount of 
raw wool to be maintained as a reserve ; the War Depart- 
ment was still to make all contracts for Government sup- 
plies; the Army Contracts Department was still to be 
responsible for all dealings in raw wool up to and includ- 
ing the making of tops. The new Board was designed 
particularly to take over the work of the existing Priority 
Committees. Officials of the War Department were to 

*5 Ibid. 

*« L. T., Sept. 12, 1917, p. 3. 



124 



WAR TIME CONTROL OF INDUSTRY 




ask its advice in allocating Government contracts and its 
chairman, the Director of Wool Textile Production, was 
to keep it informed monthly of the total quantity of wool 
required for such contracts. If at any time there should 
be, for unavoidable reasons, a deficiency in the wool put 
through the machines for government purposes, the 
Chairman should release as an additional civilian supply 
a quantity sufficient to make up the deficiency. The Di- 
rector of Raw Materials should from time to time furnish 
statistics as to stocks and information as to the exporta- 
tion of wools, noils, tops, and yarn. Thus informed and 
fortified, the Board was henceforth to allocate to dis- 
tricts, trades, groups, and firms the quantity of wool and 
tops available for the civilian trade. In so doing it was 
to have particular regard to securing the most efficient 
execution of government orders and to employing to the 
greatest advantage the labour, machinery, and skill en- 
gaged in the industry, keeping in full use as much ma- 
chinery as possible.^^ The scheme was much as at first 
outlined, although the provision regarding the release of 
additional supplies was a concession. Agreeing to give 
the new arrangements a trial, the trade promptly elected 
its representatives and the Board at once went to work. 
A better feeling quickly prevailed in wool manufacturing 
centres and there was hope that, with longer hours al- 
lowed for labour and a larger allocation of raw wool to 
the civilian trade, business might prosper. 

An increase in hours was announced before the Board 

*^ Ibid., Sept. 20, p. 3. 



WOOL AND WOOLLENS 



125 



was finally constituted. In August the Central Wool 
Advisory Committee made known that from September 
I the weekly hours of work would be increased from 45 
to 50. Such increase tended to allay discontent on the 
part of employes, who at a meeting of the National As- 
sociation of the Unions of the Wool Textile Trade in 
July had considered the advisability of agitating for fur- 
ther advances in wages and had expressed distrust of the 
Commission then sitting in Leeds to inquire into indus- 
trial unrest."*^ The longer working time, too, encouraged 
the belief that the Government would issue wool and tops 
in sufficient quantities to keep the machinery employed 
for the full 50 hours per week.*^ Merino tops, it be- 
came clear, would be more plentiful, although in the case 
of crossbreds the demand for military purposes might 
still for some time restrict the supply available for civilian 
needs.^® 

Meanwhile the Government continued and extended 
its policy of purchasing the domestic and Colonial wool 
clips. Before summer it had completed arrangements 
for the purchase of the 19 17 clip of the United Kingdom, 
the prices being 50 per cent, above the 1914 level.^^ 
Collection and payment this time were far more prompt 
than in 19 16 and growers expressed their satisfaction. 
In the middle of July, the Chancellor of the Exchequer 
explained in Parliament that the Australasian clip of 

48 L. T., Jy. 9, 1917, p. 5; Aug. 31, P- "• 

*9 Ibid., Aug. 14, p. II. 
BO Ibid., Sept. 25, p. 13. 
51 Cd. 8447, p. 14. 



f! 



126 



WAR TIME CONTROL OF INDUSTRY 



19 1 7 had, on the authority of the War Cabinet, been 
bought for £40,000,000.^2 This sum represented the 
same price as that paid in the preceding year, a 55 per 
cent, advance on the prices of 19 13-14, the total payment 
being greater because the entire cHp of AustraHa was now 
secured. In August it became known that the Govern- 
ment had offered to buy the South African cHp of wool 
and mohair on the same terms as the Australasian clips. 
Considerable opposition to the purchase, however, arose 
in South Africa and the matter became a somewhat acri- 
monious political issue. 

With the purchases of 191 7 and with the establish- 
ment of the Board at Bradford, state control of the 
woollen industry assumed pretty definite shape. After 
imposing, during a year and a half of the war, restric- 
tions merely upon the export trade, the Government in 
the spring of 1916 had been forced to protect itself 
against rising prices. At first it attempted in its pur- 
chases to determine a suitable price for the finished pro- 
duct by investigating costs. Quickly confronted with the 
varying price of raw wool, it saw the necessity of stabiliz- 
ing this price by becoming itself the sole purchaser. 
Thereupon it acquired the home clip. Since, however, 
this was a relatively small factor in the market and there 
was danger that the Colonial clips might not be fully 
available at suitable prices in any other way, the Gov- 
ernment took the decisive step of purchasing the Austral- 
asian output of 19 16. It stipulated further that any 

" L. T., Oct. 4, 1917, p. 5. 



MM 



WOOL AND WOOLLENS 



127 



Other wool imported should first be offered for sale to 
the Director of Army Contracts. Thus in practical 
control of the supply of raw wool in the United King- 
dom, the Government was faced with the problem of dis- 
tribution. Nor was it loath to undertake this, since, in 
so doing, it could effect essential economies in consump- 
tion. Acting through various committees, it put into 
force a priority scheme designed to stimulate manufac- 
ture for the military and the export demand but to dis- 
courage the making of civilian products for home con- 
sumption. Practically, this involved a rationing of the 
trade and a limitation of the working hours of the ma- 
chinery. Discontent with governmental administration 
and restrictions found expression in the summer of 1917, • 
but much of this was due to a desire on the part of the 
trade to acquire for itself the functions which the state 
had assumed. Certain concessions, but not all those 
desired, the Government made. It persisted in retain- 
ing for itself and for labour adequate representation on 
the new Board which was to take charge of distribution, 
and it refused to yield the ultimate decision of questions 
of price, of the necessary reserve of wool, and of the 
placing of its own contracts. It continued its policy of 
state purchase by acquiring the 1917 clips of the United 
Kingdom, of Australasia, and of South Africa. Its own 
savings were large in view of what its expenditure 
might have been had the price of raw wool been unre- 
stricted; and these economies were extended by the in- 
troduction of substitutes for wool proposed by expert 






I 



128 



WAR TIME CONTROL OF INDUSTRY 



advisors. A careful investigation of the conversion 
costs of manufacturers enabled it further to reduce the 
sums which it would otherwise have paid for its pur- 
chases. 

That such extensive governmental control has by no 
means, despite the complaints of the summer of 19 17, 
impaired the profits of the trade may be gathered from 
the remarks of Mr. Charles Booth, Chairman of the 
Bank of Liverpool. In his annual report of July, 19 17, 
he comments on the general prosperity in which both em- 
ployer and employe have shared ; and, making allowance 
for the reduction in working hours per week as well as 
for the increased cost of carrying stocks in consequence 
of the high price of raw material, he concludes that the 
conditions of the trade generally are sound and that the 
future is looked forward to with a good deal of con- 
fidence.^^ 

»3 L. T., Jy. 25, 1917, p. 12. 



HIDES AND LEATHER 

In respect to clothing, boots, after woollens, are the 
army's chief requirement. For them leather is needed, 
and not only for them but for harness, saddlery, and 
equipment. As in the case of coal, munitions, and 
woollens, the Government, therefore, became an exten- 
sive purchaser and had an immediate interest in the sup- 
plies available as well as in the price at which they were to 
be had. Although the analogy with woollens is closest, 
there were between the two trades differences in condi- 
tions, which became manifest m the Government's at- 
titude toward them. In particular the United Kingdom 
contained within its borders a greater relative supply of 
hides suitable for sole leather than it did of raw wool, 
and, on the other hand, a smaller relative supply of hides 
suitable for uppers. 

The distinction between these two kinds of hides was 
operative from the outset.^ Heavy hides were needed 
not only for sole leather but for harness, saddlery, and 
equipment; and for such accoutrement the home supply 
was primarily set aside. The surplus remaining after 
accoutrement leather had been provided was available 
for sole leather. Further supplies of the latter had to be 

1 The information regarding hides and leather contained in the 
following pages is, where not otherwise stated, drawn from a 
Memorandum on War Office Contracts by N. F. Wintour, Director 
of Army Contracts. Cd. 8447, Je., 1917, pp. 17-20. 

129 



130 



WAR TIME CONTROL OF INDUSTRY 



got by importing hides. At the beginning of the war, 
when the demand was unusually great, both finished 
leather and heavy hides were for a time imported in 
large quantities from Canada and the United States. As 
soon, however, as the tanning industry got adjusted, it 
assumed more and more the task of finishing all heavy 
supplies and the situation in this respect became analo- 
gous to that prevailing in the woollen trade. 

In January, 1915, the Department of Army Supplies 
made its first extensive arrangement with the sole leather 
tanners. The United Tanners' Federation undertook to 
supply the amount of heavy sole leather required by the 
Department, prices to be fixed throughout definite 
periods. The initial price was considerably below that 
prevailing at the moment. How much was gained by 
such action speedily became apparent; for the prices of 
equipment and saddlery leather continued to advance. 
Tanners could point in extenuation of their prices for 
leather of the latter sort to a rise in the cost of hides from 
7 d. per pound before the war to 14 d. in the middle of 
191 5. The Government thereupon tried again the policy 
of arranging prices with the tanners, this time for equip- 
ment and saddlery leather, leaving them to deal with the 
butchers. Again the device was effective, and the price 
of hides immediately fell to io>^ d. per pound. A policy 
of attempting to control prices of finished products with- 
out similar control over the price of raw materials suc- 
ceeded here as it had not with woollens and worsteds,^ 
2 Cf ., above, p. 108. 



HIDES AND LEATHER 



131 



because the manufacturers were in a position to dominate 
those who brought supplies to them. British butchers 
had no such market for their hides in the summer of 
19 1 5 as wool producers had for their wool in the spring 
of 19 16. The Department was obliged, therefore, to 
deal only with the finishers of hides and could for a time 
ignore the raw material. 

This easy control lasted for less than a year. Early 
in 19 16 the demands for boots greatly increased. In 
addition to the growing needs of the British army, Rus- 
sia asked for 7,000,000 pairs of boots and 6,000 tons of 
sole leather, Italy, Belgium, and Serbia for 1,500,000, 
150,000, and 60,000 pairs of boots respectively. Since 
the financial and shipping situation made it imperative that 
these needs be supplied in Great Britain if possible, meas- 
ures were at once taken to increase the production of 
leather and to maintain control of prices. 

Thus far only the heavier classes of sole leather had 
been taken for army boots, the lighter weights being 
sold to the civilian trade. At the end of May, 19 16, ten 
lighter varieties were requisitioned by the Army Council 
and the list was extended by additional orders in June, 
August, September, and December, 191 6, and in Jan- 
uary, February, and March, 1917.^ In the middle of 
19 1 6, Australian leathers, until then barred, were ad- 
mitted to military uses and rose 20 per cent, in price as 
a consequence.* 

s B. T. J., Je. I, 1916, p. 589; D. R. M., 3rd ed., p. 170. 
*L. E., Feb. 17, 191 7, p. 316. 



132 



WAR TIME CONTROL OF INDUSTRY 



HIDES AND LEATHER 



133 



With army demands thus increasing, the price of hides 
showed a strong tendency to rise. The Government, 
therefore, in the first half of 19 16 was forced to do what 
it had avoided a year earHer. It entered into negotia- 
tions for fixing the market price of heavy hides and se- 
cured the advantageous one of 10 d. per pound. At prac- 
tically this figure the price has since remained, although 
in the world market there was a marked advance during 
the latter half of 19 16. In the Argentine hides rose to 
21 d. and in an uncontrolled market native hides would 
probably have reached 1 5 d. Inasmuch as the home pro- 
duction is about 2,500,000 hides yearly, each weighing 
some 60 pounds, £3,000,000 less a year was paid for 
hides than would have been paid had the Government 
not intervened. 

Now that all native hides suitable for army boots 
were to be at the disposal of the tanners who filled con- 
tracts for the Government or the Allies, a new fixing of 
the prices for leather was opportune. By the summer 
of 1 91 6 the Government had learned considerable about 
the determination of costings, and resolved to apply its 
knowledge to the processes involved in tanning. The 
task was not simple, since the value of leather varies from 
tannage to tannage and prices had to be fixed for some 
thousands of varieties. A Committee composed of three 
tanners, a leather merchant, and two boot manufacturers 
undertook to assess the comparative value of each tan- 
nage on the basis of prices prevailing at the beginning of 
the period of contract. At the same time chartered ac- 



/ 



/ 



countants of the Department investigated, in the case of 
seven representative tanners, the cost of the production 
of sole leather and the relation between tanners' pre-war 
profits and the war profits of the moment. From the 
knowledge thus acquired prices presumably fair for the 
tanner and for the country were determined. They were 
relatively lower than prices ruling in the civilian trade, 
and, when in November, 19 16, leather of certain lighter 
weights was released, the prices commanded were in many 
cases a shilling a pound higher than the prices now al- 
lowed. Perhaps 6 d. a pound would represent the dif- 
ference between market prices at the end of the year 
and the prices now arranged between the Government and 
the tanners. Tanners' profits were henceforth slightly 
above the pre-war standard, but considerably below what 
they had heretofore been during the war. Adjustments 
at quarterly intervals have since provided for fluctuation 
in the price of raw materials. 

So far as the raw materials were domestic hides, there 
was little variation in price. But the foreign supply had 
to be drawn upon and here the Government did what it 
could to help the tanners and indirectly protect itself. 
Pushing aside the middleman, it imported from France 
and Italy all heavy hides suitable for making sole leather, 
which those countries could spare. Some £50,000, rep- 
resenting the importer's profits, were thus saved. British 
Meat Companies in the Argentine, which were supplying 
the Government with meat, were induced to grant the 
United Tanners' Association as favourable rates as pos- 



/ 



134 



WAR TIME CONTROL OF INDUSTRY 



sible. Finally, to eliminate speculation in imported 
hides used for military leather, an order was issued on 
February 2, 19 17, forbidding an increase of more than i 
per cent, in the price of such hides as they pass from the 
importer to the tanner.^ Measures of this kind did 
something to modify the prices of imported hides, al- 
though in the spring of 1917 those from South America 
and elsewhere cost about twice as much as did English 
hides.^ 

While sole leather for army requirements was got in 
this manner, the securing of upper leather presented a 
different problem. Of this the home supply was en- 
tirely inadequate and had before the war been much sup- 
plemented by supplies from enemy countries. Indeed, 
Germany and Austria in getting their raw material had 
captured an industry formerly belonging to Great Britain. 
For the reservoir upon which they drew was East India 
kips. At the outbreak of the war, therefore, the De- 
partment turned to the same source, buying East India 
kips and distributing them to manufacturers. Up to the 
end of 19 1 5 army requirements were easily met and it 
turned out that the leather produced from the kips cost 
only about 12 d. per foot, whereas corresponding leather 
from British hides cost 21 d. 

With the demands of Allied armies added to those of 
the British army early in 1916 the situation changed. 
Since the new demand revealed insufficient supplies, there 

» D. R. M., 3rd ed., p. 187. 

« Amer. Commerce Report, May 8, 1917. 



HIDES AND LEATHER 



135 



was room for speculation in an uncontrolled market. 
Indications of it were afforded by the rising price of kips, 
and it bade fair to increase. The Government there- 
upon acted as it was soon to act in the case of wool. To 
insure adequate supplies and to protect itself against 
speculative prices, it purchased with the assistance of the 
Government of India all kips suitable for its purposes. 
Such were East India tanned kips of 6 pounds and up- 
wards and Bangalore tanned kips of 7 pounds and up- 
wards. For the entire stock the price paid was that of 
the market of May 6-1 1, 1916. 

Difficulties soon arose from the heavy civilian demand 
for those kips which the Department had rejected as un- 
suitable. Prices offered for them were higher than the 
prices which the Government was paying for its superior 
supplies and the tanners in India naturally preferred to 
work upon them. The Government, therefore, saw it- 
self forced to purchase unsuitable as well as suitable kips, 
in much the same way as it had somewhat unwillingly 
purchased merino along with crossbred wool from Aus- 
tralasia. Its monopoly of the supply of the raw material 
for upper leather was thus practically established. 

The methods employed in acquiring and allocating the 
kips are not unlike those which prevail in the corre- 
sponding administration of the imported wool supply. 
The Indian Government acts as intermediary. It buys 
through selected merchants, who purchase at fixed prices 
and sell at standard rates, in short, act as commission 
agents. The Admiralty furnishes requisitioned ships. 



136 



WAR TIME CONTROL OF INDUSTRY 



On reaching Great Britain the kips are handled by the 
estabhshed importing houses, which are paid a commis- 
sion of Yz per cent, on cost. The Department's inspec- 
tors select bales to be forwarded to curriers, who in turn 
are employed at commission rates to carry out the De- 
partment's specifications and deliver their product to War 
Office contractors. About 200 firms of curriers, prac- 
tically all suitable ones in Great Britain, receive Govern- 
ment work and the number of kips coming forward on 
government account each month is about 200,000. They 
constitute about 75 per cent, of the entire supply and 
cost about £300,000. 

British hides for upper leather, which constitute the 
remainder of the supply, are also controlled and utilized 
by the Department but on less advantageous financial 
terms. Before the war they sold at 15 d. per foot, kips 
at 10 d. The prices at which the two have been taken 
over work out at 21 d. and 12 d. respectively, advances 
of 40 per cent, and 20 per cent. The Government's 
saving of 9 d. per foot, applicable in 1916 to 20 million 
feet of upper leather, was £1,000,000. Probably, in 
19 1 7, twice as many East India kips will be in question 
and the saving will be twice as great. 

In contrast with these economies of the War Office is 
the expenditure of the civilian trade. Before kip leather 
came under control, boot manufacturers paid 16 d. for it, 
so great was the demand. Since then unsuitable kips 
have been sold by the Government to tanners and the 
profit credited to Army Funds. For the Department has 



HIDES AND LEATHER 



137 



the margin between the 12 d. which it pays and the 
prevailing market price. The latter has steadily ad- 
vanced and in the spring of 19 17 glace kid was at three 
times its pre-war price. "^ 

As for sole leather the price demanded for such civilian 
supplies as are available is uncontrolled. During 19 16 
miscellaneous hides advanced 50-60 per cent., South 
American 80-90 per cent. In part this was due to United 
States buying, home requirements there being large and 
exports having enormously increased.^ By the spring of 
19 1 7 the civilian population of the United Kingdom was 
being more and more neglected, while fully 90 per cent, 
of the output of English tanyards was controlled by the 
Government for military purposes.^ Even repairers 
were at their wits' end for supplies and the price for 
soling boots had advanced from 6 s. 6 d. to 9 s. 6 d. 
Two courses were advocated as likely to bring relief. 
The Government was urged to release stores, which were 
said to be considerable in the country, and a standard 
boot was proposed. ^^ 

Yielding to the first request, the Government on Au- 
gust 31, 19 1 7, released for civilian use various sole and 
upper leathers made from imported hides. The order was 
a partial relaxation of an earlier one of March by which 
the Government had appropriated all sole or upper 
leathers of certain descriptions made from British or im- 

^ Amer. Commerce Reports, May 8, 1917. 

8L. E., Feb. 17, 1917, p. 316. 

» Amer. Com. Reports, May 8, 1917. 

10 L. E., Aug. 4, 1917, p. 195; Aug. II, p. 232; L. T., Oct. 12, p. 3. 



138 



WAR TIME CONTROL OF INDUSTRY 



ported hides then in stock in the United Kingdom. In 
the case of the leathers released, the Government stipu- 
ulated that, in as much as they had been bought below 
market prices, tanners should sell them to the civilian 
trade at not more than 2 d. in excess of prices paid by the 
War Department. No one might purchase more than 
500 bends or the equivalent in butts. To relieve the 
pressing needs of repairers, half of the purchase, it was 
stipulated, must be used for repairs.^^ 

Soon after this, provision was made for the manufac- 
ture of a standard boot. Makers of it were to get leather 
at 20 per cent, below market prices and on the other hand 
they were to be content with a profit of 5 per cent. Al- 
though standard boots were not likely to reach London 
before 19 18, it was clear that their advent would be a 
boon to the poorer classes who were paying absurd prices 
for worthless footwear.^^ 

Since the Government during 1916 had become more 
and more involved in the administration of the leather 
industry and since at the end of the year the question of 
supplies had become more urgent owing to heavy de- 
mands of the Allies and the shortage of shipping, a 
Central Leather Supplies Advisory Committee was set 
up. To this and to its subsidiaries the Department hence- 
forth communicated all pertinent information at hand — 
the supplies of hides, leather, and tanning material in the 
United Kingdom and under Allied control on the one 

11 L T., Aug. 22, 1917, p. 3. 
^2 Ibid., Oct. 12, p. 3. 



HIDES AND LEATHER 



139 



hand, the needs of the army, of the Allies, and of the 
civil population on the other. Thus informed the Com- 
mittee can give advice on questions which arise. The 
Government, on its part, has tried to increase the Com- 
mittee's responsibility and in the opinion of the Director 
of Army Contracts the policy has been highly successful. 
" The smoothness with which the elaborate organization 
of the leather trades has worked," he remarks, " and the 
ready co-operation which has rendered possible the large 
changes in methods of trading and production afford 
ample justification for this policy." Certainly there has 
been far less friction than arose between the Government 
and the woollen trade. This may be due to the less com- 
prehensive interference of the state in the leather in- 
dustry. Only one branch of the raw material is under 
that complete governmental control which implies pur- 
chase and allocation, viz., upper leather; sole leather 
is controlled only in so far as domestic and imported 
hides are subject to pre-emption on the part of the Gov- 
ernment. At times the Government releases certain 
hides which it has held back and stipulates under what 
conditions they may be sold. Other hides for civilian 
use are sold in an uncontrolled market. 



SHIPPING 

The Government's attitude toward the shipping in- 
dustry is significant not only as an essay in state con- 
trol, but also as a factor in the food situation. Most 
consumers of food in the United Kingdom came to feel 
that they were paying too high prices largely because the 
Government did not control certain producers, middle- 
men, and shippers. And the greatest offenders were the 
shippers. 

At the outbreak of war the interest of shipowners cen- 
tred in two questions — what ships would the Govern- 
ment requisition, and what would be done for the pro- 
tection of ships not requisitioned. The answer came at 
once. On August 3, 19 14, a Royal Proclamation declared 
that a national emergency demanded the immediate em- 
ployment of a large number of vessels for use as trans- 
ports and auxiliaries. Since there could be no delay, the 
Lords Commissioners of the Admiralty were to requisi- 
tion immediately any vessel within the waters adjacent to 
Great Britain. Owners might file their claims with the 
Admiralty; and in case the Admiralty and the owner 
failed to agree as to the proper compensation, the Presi- 
dent of a Board of Arbitration was directed to choose 
two members of his Board as arbitrators. If the two 

could not agree, reference should be had to the President 

140 



SHIPPING 



141 



as a third member. This Board of Arbitration was to be 
constituted in seven panels, comprising Government nom- 
inees, shipowners, bankers, underwriters, marine insur- 
ance companies, insurance brokers, and average adjust- 
ers.^ A month later its functions were increased. The 
President was empowered to authorize from time to time 
all or a part of the members of a panel to consider ap- 
proximate monthly rates of hire for vessels of different 
classes. Arbitrators from the Board might have regard 
to such rates but need not be bound by them.^ As a 
result of these arrangements there were gradually drawn 
up so-called " blue-book " rates for requisitioned ships, 
rates markedly below those soon prevailing in the market. 
They were revised in March, 191 5, but since then have 
been unchanged.^ The rate in the summer of 19 17 was 
1 1 s. per gross ton per month for " tramp " steamers, 
somewhat more for " cargo " liners according to their 
speed.^ 

The number of ships speedily requisitioned by the 
Government was about 20 per cent, of the total mer- 
cantile tonnage of Great Britain.^ In June, 1914, this 
total for vessels of 100 tons and over was 20,523,706 
gross tons, and the ships of such tonnage numbered 
10,124. If only vessels of 1600 tons and over be con- 
sidered, the total tonnage was 16,900,000 gross tons and 

1 B. T. J., Aug. 20, 1914, p. 481 . 
2 Ibid., Sept. 3, 1914, p. 608. 
8Cd. 8483, p. II. 
*B. T. J., Je. I, igi7, p. 219. 
5 P. D. C, 1915. LXIX, 925. 



y> 




142 WAR TIxME CONTROL OF INDUSTRY 

their number was 3900/' The 20 per cent, requisitioned 
by the Government comprised about 1500 ships, many of 
them of the larger sort. The commandeering fell at 
first unequally upon firms of shippers, some being obliged 
to put a large proportion of their vessels at the disposal 
of the state while others were able to retain most of their 
ships free. 

For vessels not requisitioned the Government at the 
outbreak of war prepared and put into force a scheme 
of war insurance. Ordinary policies had protected ship- 
owners only against the usual perils of the sea, not against 
King's enemy risks. Nor had the state heretofore been 
willing, although urged, to undertake insurance involving 
risks of the latter sort. Shipowners had, therefore, been 
forced to protect themselves in this matter by Protecting 
and Indemnity Associations. The Government's new 
proposal, drafted by an expert sub-committee of the Im- 
perial Defence Committee, was to assume 80 per cent, of 
the risk borne by the Protecting and Indemnity Associa- 
tions, receiving in return 80 per cent, of the premiums 
paid in. The remaining 20 per cent, of the risk was to 
rest upon the Associations, which in consequence were 
to receive the corresponding 20 per cent, of the premiums. 
The rate henceforth was to be a fiat one, administered 
by a state bureau for insuring cargoes and by an advisory 
board. Despite this seemingly favourable arrangement, 
so considerable were the losses suffered that within the 
first six months shipowners were obliged to pay in war 
« B. T. J., Je. I, 1917, p. 219. 



SHIPPING 



143 



insurance, it was estimated, 3 per cent, on ships valued at 
£120,000,000. One firm, managing a fleet of eighteen 
tramp steamers, paid £14,000 in premiums to cover 
King's enemy risk."^ 

For a little time after the outbreak of the war freights 
rose only slightly, merely enough to reflect the added cost 
of war insurance. But by November, 1914, an increase 
began which continued for some four months. Several 
factors contributed, the greatest being the decline in avail- 
able tonnage. One-fifth of the mercantile tonnage of 
Great Britain had been diverted to the needs of the navy 
and army. Many vessels were shut up in the ports of 
the Black Sea and the Baltic, and in enemy's harbours. 
A half million tons of shipping had been sunk. Of the 
w^orld's tonnage, the 14 per cent, represented by German 
and Austrian ships was in part idle in neutral ports. The 
production of British shipyards, far from meeting these 
losses, itself decreased. Labour was hard to get and 
naval requirements were receiving first attention. The 
congestion of freight at the docks, upon the railways, and 
in warehouses was a telling influence, due also to scarcity 
of labour and to the military needs of the Government. 
On January 29, 191 5, the London docks were so con- 
gested that forty vessels lay at Gravesend waiting to dis- 
charge their cargoes. Since French and Italian ports 
were in a like condition, the length of a voyage was four 
or five times as long as under normal conditions. One 

^ W. H. Renwick, Sea Freights and the Cost of Food. Nine- 
teenth Century and After, Mar., 1915. 



144 



WAR TIME CONTROL OF INDUSTRY 



expert estimated that the loss of effective tonnage through 
congestion of traffic was lo per cent. For these reasons 
there arose early in 19 15 a very real shortage in shipping 
facilities, only slightly remedied by the appropriation of 
German ships. 

Added to the shortage was the high cost of labour at 
sea. Some 30,000 alien sailors, formerly employed on 
merchant ships, were withdrawn, while men of the Royal 
Naval Reserve went for service with the fleet. Whereas 
wages in July, 1914, were £5 10 s. a month, early in 1915 
£7 IDS. was asked and paid on tramp steamers.® 

Freight rates, therefore, by March, 19 15, would natu- 
rally have risen to some extent; but whether the extent 
of the actual advance was warranted seems open to ques- 
tion. It is shown in the accompanying schedule which 
embodies later increases as well.^ 

The Labour party, considering the freights of early 
1915 unwarranted and responsible for the higher cost of 
living, urged the Government to commandeer the entire 
mercantile marine and fix maximum rates. But the dif- 
ficulties of administering twenty million gross tons of 
shipping, engaged to a considerable extent in neutral 
trade, and the possibility of having to deal with seamen's 
wages acted as deterrents. Mr. Asquith, on February 
II, argued that the cost of wheat in the New York mar- 
ket, not the shipping rates, was responsible for the high 
price of wheat in England. Of the advance from 36 s. 

8 Ibid. ; Cd. 8483, p. 10. 

9 Cd. 8483, p. 9. 



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SHIPPING 



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145 



146 WAR TIME CONTROL OF INDUSTRY 

3 d. to 57 s. II d. per quarter (8 bushels) for Number i 
Manitoba (the standard), 18 s. 2d., he said, was the in- 
crease in New York, only 3 s. 6 d. the increased freight. 
In the case of Argentine wheat, the shipper, he admitted, 
got a larger proportion of the high price, but this wheat 
came on the market only after the advance had taken 
place. ^^ 

The Committee which at the end of 19 16 investigated 
food prices and, incidentally, shipping rates, formulated 
a rule to determine whether increased shipping freights 
were borne by producer or consumer. If the commodity 
transported be such that an advance in its price would 
have little effect on the demand, while a smaller remu- 
neration to the producer would decrease the supply, the 
consumer is likely to pay any higher intermediate charges 
like freights. The consumer, the Committee concluded, 
did in this way pay from 8 s. to 10 s. per quarter on North 
American wheat imported during the cereal year 191 5- 
16, when these conditions were fulfilled. If, on the other 
hand, the demand is more elastic than the supply, the in- 
termediate charges are likely to be paid by the producer. 
Such was probably the case in general with wheat from 
Argentina, since this sold in England only when its 
price did not rise above that of North American wheat. 
Until its price reached such a point, the producer paid any 
advances in freight rates which might accrue. ^^ When 
Mr. Asquith spoke in February, 191 5, freight rates were 

10 p. D. C, 1915, LXIX, 764. 
" Cd. 8483, p. 10. 



SHIPPING 



147 



responsible for only one-fifth of the rise m the price of 
wheat which had then taken place in England. But the 
one-fifth was none the less paid by the consumer and was 
destined to increase in amount until the Government was 
forced to take cognizance of the situation. 

What the Government did very soon give attention to 
were the insulated or refrigerated spaces in British steam- 
ships. Upon these depended the meat supply of the Al- 
hed forces and it was not possible to allow an unrestricted 
advance in freights or in the prices of meat.^^ Happily 
it proved possible to make with the owners satisfactory 
arrangements, which avoided the exercise of compulsory 
powers. On April 13, 1915. accordingly, an Order in 
Council requisitioned all insulated spaces in British steam- 
ships trading with Australia and New Zealand. Some 
two weeks later a similar order was issued regarding 
steamers trading with the Argentine and Uruguay. On 
December 22 all insulated spaces in British vessels were 
taken over.^^ xhe tonnage involved was considerable, 
450,000 tons of meat coming each year from the River 
Plate and a still larger amount from Australasia.'^ The 
scheme worked well. The ocean carriage of frozen meat 
from the Argentine did not henceforth cost more than 
I d. a pound, that from Australasia not more than 

12 Cf., below, p. 184. ,, , 

WB. T. J.. Apr. 22. 1915, P- 221; May 6, p. 37o; May 27, p. 602; 

Oct. 21, p. 171 ; Dec. 23, p. 809. 

14 p. D. C, 1916, LXXXVI, 499- 

15 L T., Jy. 26, 1917, p. 8 Mr. Runciman in the Commons. 



148 



WAR TIME CONTROL OF INDUSTRY 



At the end of 191 5 the poHcy of requisitioning space to 
insure the food supply was extended. Freight rates, 
although changing little between April and August, rose 
sharply in the autumn, and the price of wheat mani- 
fested a similar tendency.^® The Government, therefore, 
appointed a Requisitioning (Carriage of Foodstuffs) 
Committee. It was composed of experts in shipping 
matters, men who were also advising the Transport De- 
partment of the Admiralty. To it was assigned the task 
of securing sufficient tonnage for the carriage of food- 
stuffs and of preventing freights on them from rising 
to prohibitive levels. It was empowered to divert or to 
requisition shipping adequate for the provision of such 
monthly supplies as the cabinet Committee on Food Sup- 
plies might prescribe. ^^ 

At once the Committee began to requisition liners and 
cargo steamers, requiring them to devote from 50 to 75 
per cent, of their space to the carriage of foodstuffs. 
Since vessels so ordered could not go into any other trade, 
the action was effective. The cost of bringing wheat 
across the Atlantic was reduced from 18 s. a quarter to 
7 s. or 8 s. by the autumn of 1916.^^ Food prices sim- 
ultaneously declined and thenceforth wheat, imported for 
the most part by the Government, paid freights which 
represented only about J4 d. on the quartern (4 pound) 
loaf. Since sugar already paid a stipulated rate of Yi d. 

^6 Cf., above, p. 145 ; below, p. 203. 

17 B. T. J., Nov. IT, 1915, pp. zyz-7S. 

18 P. D. C, 1916, LXXXVI, 505. 



SHIPPING 



149 



\ 



\ 



\ 



a pound, it could now be said that three important arti- 
cles of food were no longer exposed to the payment of 
excessive ocean freight rates.^^ 

At the same time that the Requisitioning Committee 
acquired its power, another Order in Council of Novem- 
ber 10, 191 5, further regulated the employment of British 
shipping. Although there was no intention of disturb- 
ing existing business arrangements, home needs, it was 
felt, had first claim. Henceforth every vessel exceeding 
500 tons gross tonnage and trafficking between foreign 
ports must get a licence. Later the order was extended 
so that vessels of this tonnage had to be licenced to make 
any voyage whatever. More and more the movements 
of British steamships were being interfered with, pre- 
cisely as their cargo spaces had been taken over. In 
February, 19 16, several vessels were even released from 
Government service on condition that they load wheat 
in North America for Great Britain.^^ 

A final effort of November, 1915, to relieve the ship- 
ping situation referred to the docks. A Port and Transit 
Committee was appointed to inquire into difficulties and 
regulate traffic there, to co-ordinate requirements of all 
conflicting interests, and to decide questions which might 
be referred to them, giving orders in such cases to exec- 
utive bodies at the harbours.^^ If local authorities failed 
to take suitable action, the Committee might clear con- 
gested ports. To increase the supply of labour, many of 

19 Cd. 8483, p. 9 ; L. T., Jy. 2, 1917, P- 3. 

20 B. T. J., Nov. II, 1915, P- 373; Mar. i, 1916. 

21 Ibid., Nov. II, 1915, P- 377. 



/ 



I .1 



150 WAR TIME CONTROL OF INDUSTRY 

the 40,000 dockers who had joined the army were^soon 
ordered back and it was urged thit more should be.^^ 

By February, 19 16, it was estimated that of every 100 
ships available for carrying merchandise before the war 
only 67 were still available and that of these 21 were 
foreign owned.^--^ New measures for economizing car- 
rying space were therefore devised. Chief of these was 
the restriction put upon the importation of bulky com- 
modities. In principle this was ominous. It implied 
that supplies of non-essentials would be cut off and no 
one could foresee what commodities circumstances might 
eventually force the Government to declare relatively non- 
essential. For the moment no great hardships were in- 
volved. A Royal Proclamation of February 15, 191^* 
prohibited, as from March i, the importation, except un- 
der licence, of paper and all materials used in its manufac- 
ture, of periodical publications exceeding sixteen pages in 
length (except single copies through the post), of raw 
and manufactured tobacco, of furniture woods, and of 
stone and slate for building. A month later canned and 
dried fruits were added to the list, currants excepted.^* 
The official interpretation immediately put upon these re- 
strictions explained that two-thirds of the usual impor- 
tation would be licenced.2« The cutting off of one-third 
would in the case of paper alone save tonnage equivalent 
to that of all ships entering British ports during two or 

22 P. D. C, 1916, LXXX, 330. 

23 Ibid., p. 294. Tv^r < n^, 

2*B. T. J., Feb. 17, 1916, p. 451; Mar. 16; p. 773- 
25 Ibid., Feb. 24, p. 537. 



SHIPPING 



151 



three weeks. Restrictions upon other materials would 
bring the saving to about one month's tonnage entries. 
Since the Admiralty had taken 25-30 per cent, of the 
mercantile tonnage, the order gave back space equivalent 
to one-third of this. Several commissions were ap- 
pointed to administer the new order.^^ At the end of 
March the list of imports requiring licences was increased 
by several commodities — baskets, cement, cotton yam 
and manufactures (except hosiery and lace), cutlery, 
fatty acids, furniture and other manufactures of wood, 
hardware, oil cloth, soap, toys, games, playing cards, 
beech, birch, elm, and oak woods, finally woollen and 
worsted manufactures of all kinds, except yarns.^^ In 
August glass was added.^^ From the beginning of 1917 
the allowance of paper and paper materials was still 
further reduced from two-thirds of the normal supply to 
one-half of it.^^ The promise of such elaborate regula- 
tions was high, but their results were, as the sequel will 
show, disappointing. 

Despite the requisitioning of shipping for the carriage 
of meat and wheat and the beneficent effect of this action 
in the spring of 1916, public feeling in the autumn of that 
year was becoming more and more incensed over the 
seeming profits of shipowners. To this discontent Mr. 
Anderson gave voice in Parliament on October 1 7. Quot- 
ing a recent pronouncement of Mr. John Hill, a trade 

26 Ibid., Mar. 23, p. 854. 

27 Ibid., Mar. 30, p. 938. 

28 Ibid., Aug. 24, p. 546. 
2» Ibid., Dec. 7, p. 715. 



I' 



152 



WAR TIME CONTROL OF INDUSTRY 



union secretary of the Boiler-makers' Society, he declared 
that, while wages had since July, 1914, advanced less than 
15 per cent., the average increase in the cost of living was 
officially stated to be 45 per cent. Ships built had been 
sold at prices from 500 to 1000 per cent, above the cost 
of their production in 1914. One ship-building com- 
pany, not the most prosperous one, on a capital of £360,- 
000 had within a year made a profit of £240,000, or 70 
per cent. As for shipowners, Mr. Anderson continued, 
the shipping journals show South American freights ris- 
ing from 10 s. at the beginning of the war to 150 s. early 
m 19 16. In view of this the workmen cannot be per- 
suaded that profits are not excessive. ^^ 

To counteract this current of public discontent, Mr. 
Runciman on October 17, 1916, made an important speech 
in the Commons " giving details now for the first time." 
" I am doing so,'' he continued, '' because I understand 
that outside feeling is directed against shipping. I think 
it about time the country knew that out of a total mer- 
chant fleet of nearly 10,000 vessels, only iioo [elsewhere 
1 1 18] ocean-going vessels are free to conduct their own 
operations." Of the remainder the large number in the 
service of the army and navy were, he said, under blue- 
book rates ; others, requisitioned by the Foodstuflfs Requi- 
sitioning Committee or trading on behalf of the Allies, 
were under fixed rates far below the open market rates' 
Of the 1 1 18 vessels not controlled, 297 were permanently 
employed abroad between foreign ports to maintain Brit- 
«o P. D. C, 1916, LXXXVI, 468. 



SHIPPING 



153 



ish interests ; 588 were cargo liners or tramps chartered 
to liner companies to keep alive the connection with other 
countries, "a mere skeleton of the organization neces- 
sary"; 233, finally, were free tramps, the recipients of 
the high freights which occasionally figured in the press 
and formed the basis of questions asked in the House. 
If it seems to any one that such freights are taken from 
the flesh and blood of the people, let him reflect that the 
number of free vessels engaged in carrying food is about 
60. 

As to the actual relation between the rising prices of 
foodstuffs and rising freights, the figures, Mr. Runci- 
man continued, are as follows : The price of meat up to 
the autumn of 19 16 appears to have increased by 4 d. or 
5 d. a pound, American bacon by 8d. or 9d., Canadian 
cheese by 4 d. or 5 d. ; of these amounts ^ d., Yi d., >4 d., 
respectively, have been due to increased freights.^ ^ It 
was the same with wheat.^^ As to purchases of wheat 
in Australia, the Government could not make such 
unless it was prepared to divert vessels into that trade. 
The diversion was uneconomic, since a cargo vessel could 
make only two and one-half voyages to Australia in a 
wheat year, whereas tramp vessels run across the Atlan- 
tic from six to eight times a year. The Government, 
however, was prepared to be uneconomic in order that 
supplies might not depend on one market alone. To get 
the best dispatch from cargo vessels by inducing man- 

31 Ibid., pp. 505-508. 

32 No figures were given. 



I 



154 



WAR TIME CONTROL OF INDUSTRY 



SHIPPING 



15s 



agers, captains, and engineers to hurry them, it had been 
decided to pay for wheat carriage on the basis of voyage 
charters. At the moment rates were being worked 
out, not by shipowners, but by those skilled in making 
such calculations.^^ 

Such was the somewhat belated explanation of the 
President of the Board of Trade. It was true that the 
Government had already done much to remedy a situation 
which for a time allowed to shipowners, as Mr. Lloyd 
George later declared, prodigious profits.^* Even Lord 
Furness, the president of a great shipping firm, admitted 
that for two years earnings had been " greatly in ex- 
cess of an average pre-war year," and that the companies 
had, " like other trades been allowed to retain a margin 
ranging from 50 per cent, to 20 per cent, of such excess 
earnings." Some owners and some tramp companies 
after making large profits had, he added, sold their ton- 
nage at high prices, distributing both earnings and cap- 
ital.^^ 

The ill-repute which in the eyes of the public attached 
to such prosperity could not, however, be expected to dis- 
appear at once. The annual statements, indeed, of cer- 
tain steamship companies made so late as July, 19 17, 
continued to reflect their recent gains. The profits of 
the British Steamship Investment Trust (Limited) for 
the year ending June 30, 19 17, enabled the directors to 
recommend a dividend on the deferred stock of 30 per 

S3 Ibid., p. 503. 

84 L. T., Dec. 20, 1916, p. 10. 

S5 Ibid., Jy. 30, 1917. p. 12, 



cent, less tax. This, with a bonus of 10 per cent, less tax 
and an interim bonus of 10 per cent, paid in January, 
brought the total distribution for the year to 50 per cent, 
less tax. At the same time Furness, Withy & Co. 
(Limited) distributed 20 per cent, tax free as the year's 
return to shareholders.^^ 

In his annual address, however. Lord Furness sounded 
a note of warning. During the commercial year, not 
only had the shipping industry like all others become sub- 
ject to the increased excess profits tax of 80 per cent, 
(formerly 60 per cent.), but the Government had requi- 
sitioned at blue-book rates practically all ocean-going 
tonnage. It was certain that this remuneration would 
not leave a profit equal to the pre-war average. Tonnage, 
too, could now be withdrawn from any route and applied 
where it would best serve national needs. This was as 
it should be, but hardship would come with the attempt 
to recover the neglected routes. For foreign owners 
w^ere meanwhile making huge profits from uncontrolled 
freights, being free as well from British competition. 
Their accumulated reserves would make them formidable 
competitors in the future. Then, at least, the reserves 
accumulated by British companies early in the war would 
be of great avail to the industry.^^ 

In November, 1916, a month after Mr. Runciman gave 
his " details " in the Commons, the Committee appointed 
to investigate the causes of the increased price of com- 

86 Ibid., Jy. 20, p. 7. 

87 Ibid., Jy. 30, p. 12. 



iS6 



WAR TIME CONTROL OF INDUSTRY 



modities made its second report. Discussing the reasons 
for the rise in wheat, the Committee was led to give a 
brief account of shipping. The information contained 
in this is of great value and has already been quoted. 
At the conclusion of its investigations the Committee 
makes certain recommendations. If occasion should 
offer, Governmental control over freight rates should be 
extended; competition for ships should be reduced, a 
policy, the Committee understands, already under care- 
ful consideration ; non-essential imports should be further 
excluded and certain other commodities should be subject 
to preferential treatment; lastly, the supply of tonnage 
should be increased, particularly by new construction.^^ 

The end to be attained by the first two of these recom- 
mendations was soon realized through the measures taken 
by the new Controller of Shipping, Sir J. P. Maclay. In 
the winter of 1917 he applied, first to vessels in the Aus- 
tralasian trade and then systematically to all liners, 
a new organization of control. All shipowners were 
formed into a committee of management on which the 
Shipping Controller was represented ; and, through the 
provision that all profits above those allowed by blue- 
book rates should go to the state, all motives inducing to 
competition were eliminated.^^ 

In May, 19 17, the Chancellor of the Exchequer de- 
scribed the existing situation and explained the Govern- 
ment's final policy toward shipping. After confessing 

38 Cd. 8483, p. II. 

3» L. T., May 3, iQi?, P- 7- 



SHIPPING 



157 



that there had been too long a delay in taking over con- 
trol of shipping, that shipowners had " had a very good 
time," and that he himself was not devoid of responsi- 
bility for what had happened, he stated that, of all ships 
of i6cx) tons and upwards, 90 per cent, had at length 
been requistioned or had been notified that they would be. 
It was true, he admitted further, that even blue-book 
rates had at first made possible a large return. Owing 
to increased costs of operation, this was no longer true 
and, under the terms of requisitioning, ships would no 
longer secure so much as their pre-war profits. Where 
it had not been possible to requisition vessels, the Ship- 
ping Controller had control over rates of freight. In the 
case of the 4000 or 5000 small coasting vessels, whose 
masters were often their owners, the Government had not 
thought it wise to fix a definite scale of profit, lest en- 
terprise be checked. The nation was too dependent upon 
them to incur such a risk. 

In one matter the Chancellor of the Exchequer v^ent 
so far as to call forth the protest of shipowners. One 
of the provisions of the excess profits law was that if in 
any year the return from a business was less than the pre- 
war profits, the deficiency should be made good out of 
the excess profits taken by the Government in preceding 
years. This clause Mr. Bonar Law proposed to suspend 
regarding shipowners in view of their excessive profits 
in the past.^^ In a Memorandum of June 30 the Ship- 
owners' Parliamentary Committee protested. In April, 

*o Ibid., p. 9. 



158 



WAR TIME CONTROL OF INDUSTRY 



1916, when Mr. McKenna, then Chancellor of the Ex- 
chequer, had urged them to build and buy at war prices 
and when they had explained that they could not do so 
unless the cost were to l)e met out of their war earnings, 
Mr. McKenna had given them a pledge. He had prom- 
ised them that, as soon as there could be ascertained the 
value on a peace basis of the vessels which they might 
build or purchase at war prices, they would be allowed out 
of their war earnings as a zvhole the difference between the 
price so paid and such assessed value. This pledge, the 
Memorandum continued, was broken by the proposal of 
the Chancellor of the Exchequer. Whether allowances 
were to be made them would now depend upon whether 
the profits of a current year were in excess of the pre- 
war profits. Since this would seldom happen, the Gov- 
ernment was doing its utmost to prevent the redemption 
of Mr. McKenna's pledge. The shippers then explained 
that rising freights had been forced upon them by the 
competitive bidding of cargo owners and that rates could 
have been kept down only by prohibiting the importation 
of less essential cargoes.^ ^ Whatever the merits of the 
case, the protest clearly shows that the Government's ac- 
tion during the last six months had borne hard upon the 
shippers and that the first two recommendations of the 
Price of Foodstuffs Committee had received ample at- 
tention. 

The third recommendation of the Committee, looking 
to the economy of tonnage by the further reduction of 

*i Ibid., Jy. 2, p. 3. 



SHIPPING 



159 



i 



imports, concurred with the suggestion of the shipowners 
and was, it appears, pertinent. The policy in question had 
been adopted at the beginning of 19 16 and had been ex- 
tended. Owing to a liberal issue of licences, however, it 
had accomplished comparatively little. A remark became 
current that the way to increase the import of an article 
was to issue a prohibition that it should not come in. 
Although the importation of tobacco was prohibited, the 
country in September, 1916, bought £880,000 worth of it. 
Paper imported during the same month was valued at 
£652,000 (some of it cardboard boxes), manufactures of 
silk at £1,000,000, earthenware and glass at £188,000.^2 

In December, however, as has been noted, the impor- 
tation of paper was cut from two-thirds of the normal to 
one-half, 43 ^j^^^ -^^ February Mr. Lloyd George explained 
in the Commons that unessential articles of diet must no 
longer be imported. Aerated waters, apples, and toma- 
toes came under the ban; oranges, bananas, grapes, al- 
monds, and nuts were restricted to 25 per cent, of the 
importation of 1916; canned salmon was reduced 50 per 
cent; Indian tea was shut out to some extent, foreign 
teas altogether. Although coffee and cocoa were barred, 
there were large stocks of both in the country, stocks 
that would have gone on to Germany had they not got 
stuck in England. 

When summer came and the submarine was rapidly 
reducing merchant tonnage, it became clear that staple 

^2 P. D. c, 1916, LXXXVII, 918. 
*3 B. T. J., Dec. 7, 1916, p. 715. 



;,l,;rfi4fi£!*,. 



i6o 



WAR TIME CONTROL OF INDUSTRY 



SHIPPING 



l6l 



and important imports would have to be restricted. 
Among these was cotton. The cotton industry in 191 6 
had suffered from a shortage in the year's supply of raw 
material which by November 20 had driven the price to 
12.59 d. a pound, the highest for 50 years. Nor did it 
thereafter recede, but on May 25, 1917, stood at 12.9 d. 
At about this time demands for higher wages became in- 
sistent. Threats of strike on the part of the weavers were 
on May 26 met by concessions. Soon they were to re- 
ceive what amounted to a 20 per cent, advance on pre-war 
wages, an increase already secured by the spinners."** 
Scarcely had this been settled when the spinners joined 
with the card-room operatives in demanding a 10 per 
cent, war bonus. Since the owners threatened a lockout, 
the Board of Trade intervened to secure arbitration by 
the Committee on Production. On June 17 such arbi- 
tration was accepted by the men and a crisis averted."**^ 
It was during these critical days that the shortage of 
the crop was intensified by a lack of shipping facilities. 
Already tonnage for the conveyance of cotton to the East 
had been restricted and the effect of this had been felt.*^ 
By the middle of June, considerable machinery was idle, 
the Government had warned exporters to keep down their 
engagements, and the trade was prepared for a compul- 
sory limitation of the consumption of cotton. Supplies 

^* L. T., Ann. Fin. and Com. RezK, Jan. 19, 1917, pp. 8, 19; M. G., 
May 29. 

^•iL. T., May 31, 1917, p. 3; Je. 8, p. S ; Je. 13, p. 7: Je. 18, p. 12. 

*^ Weekly Record of the Woolen and Textile Trades' Association, 
Apr, 10, May i, 1917; L. T., Jy. 2S, 1917, P- 12. 



of raw cotton on hand were 413,530 bales as compared 
with 659,350 a year before; on the other hand, stocks of 
finished goods were accumulating.*"^ At the end of June 
a Board of Control, chosen almost exclusively from the 
leading importers, spinners, manufacturers, merchants, 
and trade unions was set up. Power was given it to 
ration raw materials, to impose shorj; time, to limit the 
number of spindles in operation, and to fix prices. Thus 
fully endowed with authority, it first forbade the purchase 
of raw cotton abroad except under licence; next it or- 
dered a census of all cotton supplies in England.*^ On 
the Liverpool Cotton Market dealings in " futures " 
ceased and " spot " business, almost for the first time in 
the history of the market, was marked '' sales nil.'' At a 
meeting on July 14, the Cotton Control Board decided not 
to recommend any immediate curtailment of production. 
On the other hand, it continued for the moment its policy 
of granting licences for the purchase of one week's supply 
of spot cotton at a time but these only to spinners who had 
less than two months' supply in stock.^^ Before a month 
had passed, however, limitation of production was seen 
to be a necessity. On August 10 the Board of Control 
announced its scheme, already approved by the Board of 
Trade. In as much as the Shipping Controller was mak- 
ing a great effort to increase the tonnage available for 
cotton, particularly by arranging with the United States 

*7 M. G., May 29, 1917; Je. 23 (editorial) ; L. T., Jy. 25, p. 12. 
*8 Ibid., Je. 28, pp. 4, 5 ; Jy. 2, p. 5. 
*9L. T., Je. 30; Jy. 14, p. 7. 



1 62 



WAR TIME CONTROL OF INDUSTRY 



Government for the provision of additional tonnage, the 
new regulations were to be effective for a period of only 
three months. Cotton-spinning firms were ordered to 
stop on September 3 all but 60 per cent, of their total 
spindlage and equivalent preparatory machinery. Li- 
cences might be got on payment of from ys d. to yz d. 
per spindle to run as much as 70 per cent, of the spindles 
and even more if Government contracts were in question. 
To run more than 60 per cent, of the looms, payment of 
from 2 s. 6 d. to 5 s. per loom was required. Money re- 
ceived from these sources the Board of Control would use 
to prevent depletion of trade union funds, to ameliorate 
want and distress caused by temporary unemployment, 
and for any other emergency brought on by the crisis. 
The restrictions would be administered jointly by the 
Board of Control, the trade unions, and the employers* 
associations.^*^ 

This rationing of the cotton industry illustrates per- 
haps better than anything else the exigencies in which 
British shipping found itself in the summer of 19 17. 
The corresponding rationing of the woollen trade,^^ ad- 
ministered with considerable friction, was due only in 
part to shortage of shipping. In that case the year's 
supply of raw material also gave concern. But when 
two of the most extensive of Great Britain's industries 
were affected as were these two, the need of increased 
tonnage became imperative. The fourth recommenda- 



'50 L. T., Aug. II, 1917, p. 6. 
51 Cf., above, p. 118. 



SHIPPING 



163 



tion of the Committee on food prices accordingly became 
pertinent. This, it will be remembered, was that the 
available supply of tonnage should be increased, espe- 
cially by new construction. The summer of 19 17 saw 
the Government resolved upon remedial measures of this 
kind. 

Mr. Runciman announced in November, 19 16, that two 
and one-fourth million gross tons of shipping, or about 
three million tons dead weight, had been lost since the 
beginning of the war.^^ Nor had the tonnage con- 
structed during the same period counterbalanced this loss. 
It had, on the contrary, declined markedly in comparison 
with pre-war production. In 19 13, Great Britain 
launched 1,977,573 gross tons; in 1914, 1,722,154 tons; 
in 1915, 649,336 tons; in 1916, 582,305 tons.^^ Actual 
losses had therefore not been repaired by something like 
a million gross tons. The same deficiency appears in the 
statistics which Lord Curzon laid before the Lords in 
May 5, 1917:^* 
British ships of 100 tons and over 

in June, 19 14, were 10,124 with a tonnage of 20,523,- 

706 gross tons, but in December, 19 16, were 9757 with 

a tonnage of 19,765,516 gross tons; 
British ships of 1600 tons and over 

in June, 19 14, were 3900 with a tonnage of 16,900,000 

52 p. D. C, 1916, LXXXVII, 849- 

^3L. E., Aug. 4, 1917. Mr. Lloyd George on Aug. 15 told Parlia- 
ment that the construction for 1915 and 1916 was 688,000 tons and 
538,000 tons respectively, 

5* B. T. J., Je. I, 1917, p. 219. 



164 



WAR TIME CONTROL OF INDUSTRY 



gross tons, but on March 31, 19 17, were 3500 with a 

tonnage of 16,000,000 gross tons. 

While the first half of this schedule shows the net loss 
of nearly a million tons of shipping up to the end of 1916, 
the second half shows the increasing destruction of larger 
vessels during the early months of 19 17. The sinking 
of tonnage due to the new activity of submarines after 
February i was described by Mr. Lloyd George in Parlia- 
ment on August 16. In April the loss had been greatest, 
amounting to 550,000 tons gross; in July it had fallen to 
320,000 tons and in August it was still declining.'^'^ By 
the end of September the total losses during eight months 
approximated the losses before that period,^^ being nearly 
two and one-half million tons. Only a great acceleration 
in construction could repair this ruin. 

At the end of 1916 the Board of Trade began to take 
measures to provide against the recurrence of another 
year of slight output. A large number of engineers, 
fitters, and mechanics was recalled from the Colours and 
from yards doing Admiralty and munitions work. The 
Admiralty allowed some forty-five merchant vessels near- 
ing completion to be finished while certain less necessary 
Admiralty work stood aside. Arrangements were made 
to have the companies in the shipbuilding ports pool their 
skilled labour, e. g., the eight or ten shipbuilding yards and 
the numerous engineering works on the Wear. Skilled 
men were to concentrate their labour on the vessels near- 

55 L. T., Aug. 17, 1917, P- 8. 
59 N. Y. Times, Sept. 29, 191 7. 



jl 



11 



SHIPPING 165 

est completion regardless of the yard to which they be- 
longed. The shortage of steel, it was hoped, would soon 
disappear as the Ministry of Munitions extended its steel 
works.^^ In January, 19 17, the Shipping Controller took 
steps to buy all available tonnage in the United States 
and Canada, to lay down standard cargo carriers in Great 
Britain, and to push to completion more than two million 
tons of unfinished ships. By August Mr. Lloyd George 
could declare that 480,000 tons had been turned out dur- 
ing the first half of 1917 and that 1,100,000 tons would 
be during the second half. Some 320,000 tons would 
have been bought and the total addition to Great Britain's 
shipping during the year would therefore be 1,900,000 
tons. This was very nearly the normal output of 
1913. The Premier predicted that through production 
and purchase the acquisition of 19 18 would be 3,000,000 
tons.^^ But two million tons or even three million tons 
added to British shipping yearly would not now repair 
the havoc wrought by submarines. The final exhorta- 
tion of the Shipping Controller, therefore, was that the 
United States should build extensively enough not only 
to transport its troops and its munitions of war but also 
to create the surplus needed to counterbalance British net 
losses. He suggested that it set itself to construct six 
million tons of merchant shipping. To produce three 
times as much as the British at their best have done and 

"P. D. C, 1916, LXXXVII, 852; B. T. J., Mar. i, 1917, p. 609; 
L. T., Dec. 23, 1916, p. 3. 
"L. E., Aug. 4, 1917; L. T., Aug. 17, p. 8. 



1 66 



WAR TIME CONTROL OF INDUSTRY 



six times what it itself has previously done, is not a 
simple task, but it is one of vital importance for the 
Allied cause/'''^ 

59 N Y. Times, Sept. 29, 1917. 



i 



FOOD 

SUGAR, MEAT, AND BREAD 

To the tnree foodstuffs which Mr. Askwith once men- 
tioned as essential, government regulation has during 
the war been applied at different times and from some- 
what different motives. Sugar was at once taken in 
hand, since the supply was highly precarious ; before very 
long much of the meat imported into Great Britain was 
appropriated that the Allied armies might be adequately 
fed; but, although from the beginning of the war the 
Government undertook to regulate the supply of wheat, 
it did not until after two years make far-reaching regula- 
tions touching the sale and consumption of bread. 

When on August 4, 19 14, shops reopened after the 
bank holiday, in certain large provincial cities there was 
a rush to buy provisions. Next day the alarm spread to 
London, where many small shops were speedily sold out 
and several large ones had either to stop the sale of pro- 
visions or to refuse to customers more than the quantities 
usually purchased. In the West End and in some resi- 
dential towns people loaded their motor cars with food- 
stuffs and turned their dwellings into store houses.^ The 
prices of certain commodities rose sharply. Compara- 
tive quotations of July 28 and of August 6 for flour were 

1 A. R., 1914, p. 184 ; p. D. C, 1914, LXV, 2213. 

167 



I 



1 68 



WAR TIME CONTROL OF INDUSTRY 



f^^ffi 'W ' 



i^d., i>$d. ; for sugar (cubes) 2d., 4d. ; for English 
beef 6y2 d., 7>^ d.; for chilled beef 6 d., 7>^ d.; for 
frozen beef 4>^ d., 6]^ d. ; for English mutton 8 d., 
8>^ d. ; for Danish bacon 8>4 d., io>^ d. ; for Colonial 
cheese 6}i d., 8>4 d. ; for butter 13 d., 15 d.^ Flour and 
English meat, it will be seen, rose comparatively little in 
price, imported meat, cheese, and butter somewhat more, 
while the rise in sugar was abnormal. 

A Committee of the Cabinet with Mr. McKenna as 
chairman acted promptly. It summoned prominent re- 
tail food dealers, who recommended what might serve as 
maximum prices for commodities like sugar, butter, 
cheese, and bacon, and these prices were at once officially 
adopted by the Board of Trade. After investigation, the 
Cabinet Committee announced that, including the home 
crop then being harvested, there was in the United King- 
dom food for five months. Trade, the Committee pre- 
dicted, would soon be resumed, and hoarding was 
deprecated. In the House of Commons a bill was passed 
enabling the Board of Trade to take possession at reason- 
able prices of foodstuffs which were being unreasonably 
withheld or cornered.^ Retail provision dealers under- 
took not to supply in the future any customer with more 
food than he normally required. Ships w^ere soon bring- 
ing in large quantities of wheat, flour, meat, and fruit. 
The Canadian Government offered a gift of 98,000,000 

2 L. T., Aug. 7, 1914. 

3 A royal proclamation of Sept. 17 carried out this provision ; 
B. T. J., Sept. 24, 1914, p. 808; Cf. P. D. C, 1914, LXV, 2212-2222. 



FOOD 169 

lbs. of flour to meet the needs of the people and the prov- 
ince of Alberta undertook to deliver free in English 
ports 1,000,000 bushels of Alberta oats. Through its 
control of the railways the Government could regulate 
the distribution of food supplies and prevent panic prices. 
The Board of Education made ready to provide meals, 
during vacations as well as during sessions of school, 
both for children under school age or already out of 
school and for those in attendance.* So effectively was 
the crisis met that the days of panic were soon passed. 

SUGAR 

The extraordinary movement in the price of sugar dur- 
ing the early days of August arose from the sudden 
severance of relations between the United Kingdom and 
the chief sources of its sugar supply, Germany and Aus- 
tria. In 1913, 80 per cent, of the sugar consumed in the 
British Isles was beet sugar, and of this 68 per cent, came 
from the countries in question.^ Henceforth the product 
thus cut off had to be made good by increased importa- 
tions from other sugar-producing countries — Cuba, 
Java, the United States, Mauritius, the British West In- 
dies, and the Philippines. 

To insure the getting of a supply from these sources, 
the Government on September 1 1 announced the appoint- 

* P. Alden, War and the Wage Earner, Contemporary Review, 
Sept., 1914, p. 2,77- 

5 J. W. Robertson-Scott, Opportunities of the War. Nineteenth 
Century and After, Oct., 1914. The beet sugar consumed was 
1,570.053 tons, the cane 399,8.34 tons; beet sugar from Germany was 
938,438 tons, from Austria 359,468 tons. 



170 



WAR TIME CONTROL OF INDUSTRY 



ment of a Royal Commission. It was empowered to 
enquire into the amount of sugar in the United Kingdom, 
to purchase and sell sugar, to control its delivery, and to 
take steps to maintain the supply.^ The need was im- 
minent. Imports into the United Kingdom during 
August, 1 9 14, were only 34,000 tons, compared with 184,- 
000 tons during August, 1913. At the end of the month 
the stores in bonded warehouses had fallen to one-half 
of what they were a year before and were less than suffi- 
cient for one month's consumption^ Germany mean- 
while had forbidden the exportation of her beet sugar to 
the United Kingdom; and His Majesty's Government, 
replying in kind on September 30, forbade importation 
from any European port, that trade through Holland 
might not put money into the enemy's pockets.^ 

The Commission at once and with great secrecy en- 
tered the market. Acting through a single firm, it bought 
all the surplus stock of Cuban sugar, although "the 
Americans wanted the whole lot for themselves." Other 
sugar was bought from Java, Mauritius, and South 
America before any one suspected that the Government 
had "gone into the grocery business." The price de- 
manded was a pretty high one, " a world price, such as 
Americans would pay." ^ 

As a result of this activity, the shortage of stocks was 
remedied by November, 1914, and the maximum price, 

« B. T. J., Sept. 24, 1914, p. 810. 

7 Cd. 8483, p. 20. 

8E. N., Oct. 3, 1914; B. T. J., Oct. 8, 1914, P- 94- 

»M. G., Sept. 29, 1916, p. 12. The phrases are Mr. Runciman's. 



FOOD 



171 



recommended by food dealers and adopted by the Board 
of Trade, could be reduced from 3J4 d- to 3^ d. Lower 
it could not be put, since prices paid had been considerable, 
and the expense of transportation from distant centres 
with high rates of insurance and high dock charges 
rendered the cost even to the Royal Commission far 
above the peace-time price of sugar. A testimony to the 
efficiency of the Commission, however, was the fact that, 
although it bought principally in the United States and 
in Cuba, where American firms had powerful interests, 
the f. o. b. price of granulated sugar in New York in 
19 1 6 was higher than the contemporary wholesale price 
of sugar in bond in London. To the price which was 
paid, the Commission added, when it sold, only such a 
fraction of the cost as would meet insurance and working 
expenses, would create a surplus looking to the mainte- 
nance of uniformity in price, and would provide a fund 
to meet any possible reduction in prices at the end of the 



war. 



10 



Not only did the Government become the sole importer 
of sugar but it assumed control of the refineries. Re- 
finers received from it raw sugar at certain prices and 
sold their product at prices prescribed. Profits thus re- 
stricted were further controlled. Anything in excess of 
pre-war returns and an additional percentage agreed upon 
was henceforth recoverable by the Royal Commission. 
Profits of wholesale distributors were likewise limited to 

i^ per cent, of what they paid. Such the Commission 
10 Cd. 8483, pp. 20, 21. 



1^2 



WAR TIME CONTROL OF INDUSTRY 



found, on investigating pre-war profits, was a fair return. 
On the other hand, no attempt was made to keep retail 
prices entirely uniform. They were watched, however, 
and, if here and there traders exacted excessive prices! 
action was taken.^^ In this way the Government di- 
rected the entire sugar trade, controlling all transactions 
from the sale by the distant foreign producer to the pur- 
chase by every household in the United Kingdom. 

The prices of a commodity thus controlled should have 
been, it might be expected, advantageous to the consumer. 
On the contrary, the cost of no other staple article of 
food in England advanced so much. By the end of 1916 
the increase was 170 per cent. The retail price of white 
granulated sugar in July, 1914, was 2 d. per lb., in Decem- 
ber, 1916, it was 5j^ d. Much of this advance came at 
once and was due to the restricted sources of supply. 
After the sharp August advance of about 100 per cent., 
the price fell back to one 75 per cent, above the normal 
— i. e., to 31^ d. retail. There it remained until Septem- 
ber, 1915. In that month a duty of y^ d. per lb. was 
imposed, but was counterbalanced in part by a reduction 
of Ya d. in the margin allowed to wholesalers. The sell- 
ing price remained at 4 d. until January, 1916. Before 
April, however, sugar advanced to 4^4 d. and then an 
additional duty of >^ d. was imposed. The rise during 
the remainder of the year was slight.^^ Qf the total ad- 
vance of 3^ d. therefore, i^ d. is attributable to taxa- 

^^ Ibid., p. 21. 

12 Ibid., pp. 19, 20. 



FOOD 



"^yz 



tion, as much more to the circumstances attendant upon 
the outbreak of war, and half as much again to the rise 
of the early months of 19 16. 

The last increase, owing to circumstances which had 
arisen, was not so much deprecated by the Government 
as fostered by it. At the close of 19 15, suppHes of sugar 
in the country were very low and the needs of the army 
were increasing. To check consumption, therefore, the 
Royal Commission in January, 1916, advanced the price 
of sugar and in February issued an appeal to the public. 
Notwithstanding the high price prevailing since the be- 
ginning of the war, the Commission declared, the con- 
sumption of sugar had decreased but little. In 19 15 it 
was scarcely 5 per cent, less than in 19 13. Owing to 
shortage of tonnage a restriction of importation had at 
length become necessary, and the supply of sugar brought 
into the country might be cut down by 20-25 per cent. 
In view of this the public were urged to eat less sugar, 
less jam, less chocolate. The Commission did not add 
what everybody knew — that the higher wages of the 
working classes had enabled them to indulge, regardless 
of prices, in more sweets than ever be fore. ^^ Once more, 
at the end of February, the Government put up the price, 
but after that not again during 19 16. The advance in 
the retail price of sugar from 4 d. to 4% d. early in the 
year is therefore explained by two official advances, and 
these were primarily due to the Government's desire to 
economize shipping facilities. 

13 B. T. J., Feb. 10, p. 388; Feb. 17, p. 457; B. T. R., Feb. i, 1916. 



174 



WAR TIME CONTROL OF INDUSTRY 



Such efforts were only in part successful. The 25 per 
cent, reduction in consumption which had been urged was 
not attained, but 15 per cent, less sugar was used in 1916 
than in 1915 and 19 per cent, less than in 1913.^* At the 
end of the year the stock on hand was greater than a year 
earlier. 

This restriction of the supply was not effected without 
arousing criticism. It was said that if dealers and manu- 
facturers had continued to import on their own account, 
they would in many cases have been able to secure more 
abundant supplies. To which the Government replied 
that the question was not one of purchasing in foreign 
markets but of transporting the purchases to Great Brit- 
ain. In this respect the Government was in a position 
to meet the demand better than the private importer. 
The latter would have to pay abnormal freight rates if he 
could get any tonnage at all, whereas the Government 
could and did import at blue-book rates. Without its 
control, prices would probably be much higher than those 
which prevailed, as, indeed, they were in New York.^^ 
Less easily answerable were the charges made relative 
to the distribution of sugar. In the Commons in No- 
vember, 19 1 6, Mr. Tickler declared that it was hard to 
persuade the public that the Sugar Commission had been 
a success, when thousands of families were unable to 
get even a moderate supply. What they cannot under- 

14 L. T., Ann, Fin. and Com. Rev., Jan. 19, 1917, p. 13: L. R, Feb. 
17, p. 299. In 1913 the consumption of the United Kingdom was 
1,800,000 tons; in 1916, about 1,450,000 tons. 

15 Cd. 8483, p. 21. 



FOOD 



175 



stand, he said, is that they can go into a confectioner's 
shop and buy as much as fifteen pounds of sweets, but 
at the nearest grocer's they cannot get one pound. Mr, 
Runciman already had lamented the situation. " We 
have rationed sugar, and thousands and thousands of let- 
ters have come from the poor. God forbid that we 
should have to ration anything else." ^^ Most irritating 
during the autumn was the difficulty of getting sugar for 
making home-made jam. Quantities of fine plums rotted 
in Nottinghamshire orchards, but the housewife could buy 
freely only boiled sweets at the confectioner's.^^ 

A part of the difficulty was inherent in any rationing 
scheme. Since there was little abatement in the demand 
of the public, a degree of inconvenience was inevitable. 
But, while the Commission tried to apportion its sup- 
plies so that the shortage w^ould be everywhere equally 
felt, its method detracted from its success. Refined 
sugar, whether that imported by the Government or that 
turned out by British refiners, was apportioned to whole- 
sale dealers in proportion to the amount of their purchases 
in 19 1 5. The wholesalers distributed to retail dealers on 
the same principle and the latter in turn were expected to 
sell to their customers as equitably as possible. Only to 
the jam manufacturers, in view of the size of the home 
fruit crop, was a special allotment made.^^ This principle 
of apportionment assumes a relative immobility of popu- 

16 p. D. C, 1916, LXXXVII, 873; LXXXVI, 510. 

17 M. G., Sept. 2, 1916, p. 5 ; Sept. 5, editorial. 

18 Cd. 8483, pp. 21. 22. 



176 



WAR TIME CONTROL OF INDUSTRY 



lation and demand which seems not to have existed. 
Growing businesses were penaHzed in favour of those 
which were stationary or retrogressive.^^ Well-to-do 
customers, also, in spite of the principle, succeeded in 
getting more than their relative share of the allowance,^^ 
and others achieved the same end by purchasing in a 
number of shops. To avoid exhaustion of stocks some 
grocers required that other foodstuffs be bought with 
sugar — a condition that sometimes proved onerous to 
the small buyer. Most unfortunate, however, was the 
working of the principle relative to the poor on the one 
hand, and to the confectioners on the other. Where 
shortage demands sacrifice, it is better that luxuries be 
cut off in greater measure than daily needs ; and it is more 
serious for the person who lives close to the margin of 
subsistence to get three pounds of sugar instead of four, 
than it is for the patron of the sweetshop. These defects 
in distribution were brought home to the Government by 
numerous complaints, and early in 19 17 remedies were 
sought. 

First of all, by orders of January 11, the manufacture 
of costly sweets and the use of sugar or chocolate for 
covering cake or pastry were prohibited. Hitherto in the 
West End of London chocolates costing 5 s. or more 
had been offered for sale. At first it was proposed to 
suspend entirely the sale of chocolates during the war; 
but the Food Controller argued that many thousands 

^^ New Statesman, Mar. 10, 1917, p. 533. 
20 L. T., Jy. 21, 191 7, p. 7. 



FOOD 



177 



would thus be thrown out of work and that a valuable 
food for children would be unavailable.^^ He, there- 
fore, forbade the manufacture of such chocolate as would 
sell at retail for more than 3 d. per oz. (4 s. per lb.) or 
of any other sweetmeat which would sell at more than 
2 d. per 0Z.22 When Mr. Lloyd George's daughter was 
married in June, the prohibition relative to f rostings had 
become effective and the bride's cake had none of the 
customary icing and sugar decorations.^^ 

More drastic still was another order of January 11, 
prescribing that no manufacturer of sugar-confectionery 
or chocolate might use more than 50 per cent, of the sugar 
used by him during corresponding periods of 191 5. Two 
months later the amount was reduced to 40 per cent, and 
the order was made applicable to all manufacturers of 
articles containing sugar, other than manufacturers of 
jam, marmalade, and condensed milk. After two months 
more had passed, the ration was reduced still further to 
25 per cent, of the amounts used in 191 5, and this was to 
become effective after June i.^* It could scarcely be 
said henceforth that confectioners and their patrons were 

unduly favoured. 

Another grievance of 1916 had been that little sugar 
could be had for home-made jams. In May, 1917, the 
Government set apart a certain amount of sugar for pre- 
serving fruit and speedily 250,000 letters asked for ap- 

21 M. G., May 2, 1917. 

22 D. R. M., 3rd. ed., p. 244. 

23 M. G., Je. 22, 1917. 

24 D. R. M., 3rd ed., pp. 244, 421 ; M. G., May 31, ^9i7- 



178 



WAR TIME CONTROL OF INDUSTRY 



plication blanks. Toward the end of June, the Commis- 
sion made its allotments. But only fruit growers could 
be supplied, no balance remaining for those who wished 
to purchase fruit for domestic jam-making. The sink- 
ing of sugar cargoes and the overwhelming need of 
economizing tonnage compelled such action. To the ap- 
peals for apportionments which continued to come in the 
Commission replied curtly that the letters were wasted; 
and it was only left for the Times to insist that the Gov- 
ernment had never understood how much jam w^as habitu- 
ally made at home and to what extent home-made jams 
were preferred. What the Government actually did as a 
pis allcr was to train and send out from the Food Produc- 
tion Department instructors who might teach people to 
preserve fruit without sugar. Instruction was free and 
it was hoped that the learners might pass the knowledge 
on. The Department even made arrangements with the 
Ministry of Munitions to supply botdes for preserving 
fruit and vegetables. ^^ 

It was at this time that the Royal Commission took 
action in line with its policy of early 1916. Willing to 
limit consumption and impelled by increasing costs, it ad- 
vanced the price of wholesale sugar on May 30, 1917, by 
5 s. per cwt. To the consumer this meant a rise of ^ d. 
a pound, and the price accordingly touched 6 d.^^ The 
pre-w^ar cost had trebled. 

The last and most difficult phase of the problem of the 

25 L. T., May 28, 1917, p. 3. 

26 M. G., May 31, 1917. 



FOOD 



179 



distribution of food, that relating to equitable apportion- 
ment of the supply among households, received in the 
summer of 19 17 the prompt consideration of the new 
Food Controller, Lord Rhondda. The essence of his 
solution was local control. Three principles, he declared 
further, would guide him. Supplies of food must be 
conserved, they must be shared equally by rich and poor, 
and prices must be kept down. That the public might 
know the need for economy, information about supplies 
would from time to time be published. 

His plan, as applicable to sugar, was announced early 
in August. Local authorities (the Common Council of 
the City of London, Metropolitan Borough Councils, 
Municipal Borough Councils, Urban and Rural District 
Councils) were instructed each to appoint Food Control 
Committees of not more than twelve members. Some of 
the members might be co-opted; one at least must be a 
woman and one a representative of labour. The ex- 
penses of the Committees would be a charge upon the 
Exchequer ; for they would need a special staff, including 
inspectors to watch out for evasions of the new regula- 
tions. The penalty for evasion was a heavy fine, with 
imprisonment and hard labour.^^ 

The rationing scheme which these Food Control Com- 
mittees were to put into practice and which, it was hoped, 
would remedy faulty distribution, affected primarily re- 
tail dealers and householders. No sugar might after 
October i be sold at retail except by dealers registered 

27 L. T., Aug. 6, 1917, PP- 4, 7. 



i8o 



WAR TIME CONTROL OF INDUSTRY 



with the Local Food Control Committee. To all such 
there would be a reapportionment of supplies before 
December 30. What allotment each dealer might secure 
would depend upon the number of households which 
meanwhile declared themselves his patrons. Each house- 
hold in a community, accordingly, was required to get 
from the local food ofhce a sugar registration card, a por- 
tion of which must be deposited with the retail dealer. 
Once a week but not oftener the household might obtain 
its allowance. When record of this had been made on 
the card deposited with the retailer, the card might, it 
was suggested, be transferred from one box to another. 
Weekly allowances would vary, according to the increase 
or decrease in the nation's store. The customer need 
not, of course, buy his weekly allowance, though he could 
not defer taking it until another week. Caterers and 
others supplying food would have their allowances deter- 
mined by the number of meals they served and by such 
other needs as they met. Only with the authority of the 
Local Food Control Committee could they after Novem- 
ber 4 get supplies, and these would be apportioned for no 
longer than four weeks. 

As soon as this scheme was put into operation, however, 
it was found that changes in the composition of a house- 
hold and the necessary travel of many persons involved 
duplication of supplies. Household registration, there- 
fore, had to give way to individual registration. Reluc- 
tantly the food ticket made its appearance, although cou- 



FOOD 



181 



pons were attached only for travellers. Travellers might, 
henceforth, buy their ration from any grocer, but perma- 
nent residents were to proceed as under household regis- 
tration. Should a general scheme of compulsory ration- 
ing become unavoidable, experience would have been got, 
it was felt, from the sugar cards.^^ 

It thus appears that the Government's control over the 
refining and distribution of sugar has from the first been 
more complete than its control elsewhere in the realm of 
industry except with regard to the railways. At the be- 
ginning of the war access to the supply of raw sugar was 
forbidden to private enterprise; prices were promptly 
fixed and have since been changed at will; taxes have 
incidentally been collected from all consumers ; finally an 
imperfect scheme of distribution has been replaced by a 
more equitable one. The steady shrinkage of available 
stores has, furthermore, turned this scheme of distribu- 
tion into a rationing of the population, the first imposition 
in Great Britain of compulsory economy. 

MEAT 

In certain respects the meat supply of the United King- 
dom is like the wool supply. There is in each case a 
considerable home product but one by no means large 
enough to meet the demand. Ultimate reliance is upon 
imports, which, as it happens, come largely from the 
southern hemisphere. During the war, moreover, the 

28 Ibid., Nov. 24, p. 3. 



I 



1 82 



WAR TIME CONTROL OF INDUSTRY 



demands of the army for both meat and clothing have 
encroached upon civiHan suppHes, and any hardship aris- 
ing from shortage falls eventually upon the civilian con- 
sumer. 

Differences between the meat trade and the wool trade 
have also made themselves apparent during the war. 
Governmental interference in normal traffic became im- 
perative sooner in the case of meat than in the case of 
wool ; but, on the other hand, it affected first the imported 
supply. Not until more than a year after prices had 
been fixed for the domestic output of wool w^as similar 
action taken regarding domestic meat. The latter policy, 
too, met with more opposition than did the former, owing 
largely to dissastisfaction with the prices set. In meeting 
its own needs the Government, further, in the case of wool 
appropriates first the home supply, leaving a part of the 
imported product for the civilian trade; in the case of 
meat it uses first the foreign supply, leaving a large part 
of the home proauct and at times all of it for civilian 
consumption. 

From the beginning of the war the Government has 
been concerned to maintain the home production of meat. 
In order that the large number of cattle in the country 
might be fed during the winter, it prohibited in September, 
1914, the exportation of feeding stuffs without licence. 
The August rise in the price of these foods had led some 
farmers to sell their cattle and poultry prematurely. As- 
surance was, therefore, given that the supply of feeding 



FOOD 183 

stuffs in the country was abundant and that, if prices did 
not remain normal, exportation would be entirely pro- 
hibited. Since bran was particularly abundant and 
cheap, farmers were urged to use it more.^^ 

The endeavour to maintain the number of live stock 
at a high level was successful. Agricultural returns of 
June, 19 1 6, showed 2 per cent, more cattle and sheep in 
the United Kingdom than a year before when the num- 
ber was practically unchanged, and in the summer of 
1917 there were still as many head as before the war.^^ 
Soon after the latter date, however, farmers, for reasons 
to be explained later, threatened to kill off their stock. 

By the spring of 191 5 the Government had turned its 
attention to the supply of imported meat and for more 
than two years this was its chief concern. About 40 per 
cent, of the meat consumed in the United Kingdom is, in 
normal times, imported. This it was that could most 
readily be diverted to the needs of the army, and such w^as 
the policy at once adopted. Military needs proved to 
be very great. Not only did the men of the British 
army eat more meat than they did in times of peace and 
army cooks prove more wasteful than housewives, but 
the French, and eventually the Italian, Government de- 
cided to add meat to the soldier's ration. It was a 
departure from the usage of both countries, bringing 

2» B. T. J., Sept. 10, 1914, p. 674 ; Sept. 17, p. 748. 
30 L. E., Feb. 17, 1917, p. 302; P. D. L., Aug. 2, 1917 (L. T., Aug. 
3, p. 8). 



1 84 



WAR TIME CONTROL OF INDUSTRY 



them as competitors into the world market. The Brit- 
ish Government saw that it would soon be forced to buy 
in markets where demand might readily outrun supply 
and where an alarming advance in prices might take 
place. Luckily, imported meat came from Australasia, 
and the co-operation of the Colonial Governments could 
be relied upon. Without hesitation these Governments 
took control of all beef and mutton exported, allowing 
producers a profit of lo per cent. At a price, equivalent 
to the cost of production increased by this percentage of 
profit, the home Government took over these supplies.^^ 
Unfortunately, however, the drought of 19 15 gready 
curtailed the Australasian output and it became necessary 
to rely upon the product of South America. 

The importation of meat from the River Plate is in 
the hands of seven firms. Two of them are British, one 
is native, and the others are commonly believed to be 
owned or controlled by large meat packers in the United 
States.^2 With these firms the Board of Trade began 
to treat, but found their prices excessive. The shipping 
companies, too, demanded very high freights, practically 
2j^ d. a pound from the Argentine. To curb such de- 
mands, the Government had one effective rein. The 
ships which carried South American meat were British- 
owned. To put itself in control of the situation the 
Ministry, accordingly, in April, 191 5, requisitioned all 
insulated spaces in British steamships trading with Ar- 

31 P. D. C, 1915, LXXIV, 493. Mr. Runciman's speech on Sept. 22. 

32 Cd. 8358. First Interim Report on the Increase in the Prices 
of Commodities. Meat, Milk, and Bacon. Sept. 29, 1916. 



FOOD 



185 



gentina and Uruguay, having already taken similar ac- 
tion regarding vessels trading with Australasia.^^ The 
measure affected space for 450,000 tons of meat from the 
River Plate and for a still greater amount from Austral- 



34 



asia. 

Straightway shipowners and the " meat trust " ac- 
cepted new terms. Freight rates were cut from 2^ d. 
a pound to ^ d. ; the price of beef became nearly 2 d. a 
pound less than the price asked by the beef companies.^^ 
Under its earlier contracts with the companies, the Gov- 
ernment had paid the price ruling in the market during 
the week after the landing of the meat. By its new con- 
tract for the period from May i, 191 5, to June 30, 19 16, 
the price agreed upon was only a little higher than the 
average of the prices previously paid and was actually 
lower than the price of the moment. The quantity con- 
tracted for, too, was double that of the earlier agree- 
ments. This arose from the fact that the Allies had 
decided to make their purchases as a unit and the British 
Government had been designated to act for them all.^^ 
The actual negotiations were put into the hands of busi- 
ness men, questions of price being referred in particular 
to Sir Thomas Robinson, Agent-General for Queens- 
land.37 

33 Cf. above p. 147. 

3* P. D. C, 1916, LXXXVI, 499. 

35 Ibid., 1915, LXXIV, 493. 

36 Cd. 8358. 

37 p. D. C, 1916, LXXXVI, 498. Mr. Runciman's speech of Oct. 
17. 



1 86 



WAR TIME CONTROL OF INDUSTRY 



By this transaction the Government secured its sup- 
pHes at a reasonable cost and, so far as there remained a 
surplus to put on the market, it was in a position to ex- 
ercise a steadying influence upon prices in the civilian 
trade. For its own expenses in getting beef and mutton 
from Australasia it charged only i^/^ d. or i^ d. per 
tb.^^ Instead of allowing the surplus of imports to fall 
into the hands of speculators, it appointed a committee 
of three business men familiar with the trade to un- 
dertake distribution through retail channels. Avoiding 
sales to middlemen, the committee sold the surplus di- 
rectly to distributors, who, in turn, were restricted as to 
what they might add to the price. ^^ 

On the expiration of the fourteen months' contract, 
another was entered into, providing for a purchase still 
larger than the former one, and at prices 7 per cent, 
higher than had been paid. This contract will run 
until three months after the war, subject to three months' 
notice on either side. Save for a certain amount of 
meat imported by the companies on private account, it 
embraces the entire production from the flocks and herds 
of Argentina and Uruguay. Experts consider that on 
the whole the Government buying has been economical.*^ 
So far as public access to the imported supply is con- 
cerned, the President of the Board of Trade declared 
in October, 1916, that no evidence of any exploitation 

38 L. T., Je. 25, 1917, p. 7; Je. 26, p. 7. 
89 p. D. C, 1916, LXXXVI, 498. 
*o Cd. 8358. 



FOOD 187 

whatever had come before the Board's investigating* 
committee.*^ 

However efficiently the Government may have bought, 
it could not in the end escape the problems created by 
the rising prices of meat. On August 8, 19 14, prices of 
meat in England had advanced 15 per cent, but in Sep- 
tember they fell back one-third of this amount. Since 
then their rise was continuous, registering advances upon 
pre-war prices of 35 per cent, in September, 19 15, 65 
per cent, in September, 19 16, and about 85 per cent, in 
September of 1917.*^ 

Behind the steady advance lay certain explicable 
causes. In spite of the restrictions upon the exporta- 
tion of feeding stuffs, the prices of such stuffs rose, until 
linseed cake, for example, advanced from £8 5 s. 10 d. to 
£12 15 s. 9d. in two years. Owing to the shortage of 
labour, the wages of agricultural labourers had to be in- 
creased. Above all, perhaps, civilian demands upon the 
home supply became more insistent than ever before. 
This was indirectly due to the large consumption of the 
Allied armies. One expert calculated that, whereas im- 
ported meat formerly constituted 40 per cent, of the 
amount consumed in the United Kingdom, after two 
years of war the demands of the army had reduced the 
percentage to 20 per cent.''^ By the summer of 19 17 
this figure had fallen to 10 per cent.** The home sup- 

*i P. D. C, 1916, LXXXVI, 499. 

*2Cd. 8358. L. T., Oct. 17, 1916, p. 4. 

*3 Cd. 8358. 

** L. T., Sept. 7, 1917, p. 8. Lord Rhondda's statement. 



1 88 



WAR TIME CONTROL OF INDUSTRY 



ply more and more had to suffice for civilian needs. 
Since it did not increase in amount, only economy in con- 
sumption could meet the situation. 

Some economy seems to have been attained by the 
autumn of 191 6, possibly to the extent of one-sixth of 
the meat formerly consumed."*^ Rising prices probably 
lay behind this, but in April, 191 7, the Food Controller 
decided to try the efficacy of another device. The ob- 
servance of a meatless day was ordered."*^ After a few 
weeks, however, it became clear that such economizing 
of meat resulted only in a greater consumption of bread. 
Inasmuch as there was at the time a relatively greater 
supply of meat in the country than of cereals, the meat- 
less day was discontinued, and consumption w^as left free 
from direct regulation."*^ Consumption, however, w^as 
indirectly dependent upon prices, and these at length re- 
ceived further official attention. 

The rise in prices, as it happened, had been somewhat 
less for home-grown meat than for the imported prod- 
uct. From July, 1914, to Septeml)er, 1916, British beef 
advanced in price 60 per cent, (ribs) and 80 per cent, 
(thin flank), chilled or frozen beef 80 per cent, (ribs) 
and 97 per cent, (thin flank) ; British mutton advanced 
55 per cent, (legs) and 80 per cent, (breast), frozen 
mutton 84 per cent, (legs) and 117 per cent. ( breast ).^^ 

*5 Cd. 8358. 
*«L. T., Apr. 3, 191 7. 
*7 M. G., May i, 191 7. 
" Cd. 8358. 



I 



FOOD 



189 



Despite the smaller increase in the price of the home 
product, the profits of home producers and dealers were 
substantial and by 19 17 popular criticism began to be 
directed against them.*^ Impelled by this criticism, the 
Government first restricted the profits of wholesalers. 
After May 31 they were forbidden to take a profit of 
more than 3 d. on the stone of 8 Ibs.*^^ A little later a 
new official interest developed and price fixing in the 
domestic meat trade began. 

The new interest arose from the fact that at the end 
of the summer of 19 17 the Government for the first 
time foimd itself compelled to feed a portion of the army 
and navy on home-grown meat. For this purpose, it 
appeared, there would, in September, be need of 150,000 
cattle from Great Britain and 100,000 from Ireland.^^ 
That such demands might not disorganize the trade and 
dislocate prices, it was decided that domestic beef as 
well as imported meat should come under state control. 
In July the Food Controller announced that from Sep- 
tember I certain maximum prices would be paid for live 
cattle bought for the use of the army and that these 
maxima would soon be applied to the entire home supply. 
The scale was graduated. In September the price was 
to be 74 s. per cwt, in October J2 s., in November and 
December 67 s., in and after January, 1918, 60s. Such 
cautious reduction was proposed in order that the farmer 

*»L. E., Feb. 17, 1917, p. 302; L. T., Je. 26, 1917, p. 7. 

50 L. T., Je. I, 1917. 

51 L. T., Jy. 23, 1917, p. 3. 



190 



WAR TIME CONTROL OF INDUSTRY 



might adjust himself with as Httle loss as possible to the 
new conditions. ^^ 

Although the September price was below market quo- 
tations, it was felt that this and the other autumn prices 
were tolerable. The January figure, however, was 
criticized, as discouraging to farmers and likely to in- 
duce them to sell their stock prematurely. In the Lords, 
the Earl of Kimberley said that the farming community 
were dumbfounded by the new prices, especially by that 
for January and later months. Some farmers had al- 
ready ploughed up their young turnips, put in for fodder, 
and had sown wheat instead. Farmers did not mind a 
small loss, but one of £7 or £8 on a bullock after January 
I was too much. To this the Food Controller, Lord 
Rhondda, answered that 60s., the price for 1918, was 
63 per cent, above the price of January, 19 14. Wages 
of agricultural labourers had increased by about 50 per 
cent., the cost of roots and feeding stuffs had not gone 
up more, the payment for wool, now under Government 
control, was only 50 per cent, above pre-war quotations, 
rents had not increased, and prices in general were only 63 
per cent, above those of 1914. The farmer should 
therefore be content.^^ 

To make the farmer more content, Mr. Prothero, the 
President of the Board of Agriculture, explained the 
new regulations to a Scottish agricultural society which 
was voicing its disapproval. He recognized the preva- 

52 Ibid., Jy. 21, p. 6. 
^ Ibid., Aug. 3, p. 8. 



FOOD 



191 



), 



tf 



lent dissatisfaction of the farmers with the maximum 
prices and admitted that he would have liked to see them 
higher. Indeed, as Lord Rhondda had stated in the 
Lords, the Board's proposed prices were higher than 
those which the Food Controller himself had adopted. 
Mr. Prothero reminded the farmers, however, that the 
community at large was restive under the high price of 
meat and that agriculture was likely to suffer " in that 
they were setting up a bitter and indiscriminating cur- 
rent of public opinion " against themselves. It would 
be best to think twice before they showed such resent- 
ment as to make no further effort. 

As for the seemingly premature sale of cattle, he con- 
tinued, that was what the Government now desired. 
Cattle for the army should be like those got from the 
Argentine, not yet brought "to the degree of finish 
which in the past has reflected such credit on British 
graziers and has supplied our public with the finest meat 
in the world. Prime beef is no longer economical for 
the country at large. The last stages of fattening are 
the most expensive in food." In other words, more 
feeding stuff is consumed to create an additional pound 
of beef in the later than in the earlier stages of feeding. 
So reduced had shipping tonnage been by the submarine 
that little of it could be spared for cattle food. It would 
be the business of the Department of Agriculture to see 
that the reduction in stock was not carried to the danger 
point and to protect, as the most valuable element in 
future reconstruction, the pedigree flocks and herds.^* 

54 Ibid., Aug. 7, p. 3. 



192 



WAR TIME CONTROL OF INDUSTRY 



The recommendation that cattle and sheep should be 
slaughtered in a much less fat condition than had been 
customary was further developed in a little book by 
Professor T. B. Wood, head of the Cambridge School 
of Agriculture. In this way would feeding stuffs, he 
argued, best be economized, demand and supply best be 
equalized.'^^ 

Despite explanations, protests became louder. On 
September 6 the Central and Associated Chambers of 
Agriculture declared that, though the country had an 
excellent President of the Board of Agriculture, the 
Government did not give him the consideration deserved. 
They pointed out that in every town whence reports had 
come, animals were already being put on the market 
weighing three hundredweight less than usual, and they 
passed a resolution that the price fixed for home beef 
ought to be 70s. from October i to January i, 1918.^^ 
On September 17 four hundred representative butchers 
expressed serious apprehension for the meat supply of 
the coming winter and spring. One dealer from Man- 
chester reported that, whereas he ordinarily got twenty- 
five lambs a week, he had not been able of late to get 
more than two.^^ Finally, Mr. Prothero in a speech at 
Darlington on October 5 professed his conviction that 
at current prices arable farmers who might stall, feed, or 
fatten cattle for winter markets would make small profits, 

^5 The National Food Supply in Peace and War. Camb. Univ. 
Press. Cf. L. T., Aug. 7, 191 7, p. 3. 
5« L. T., Sept. 7, 1917, p. 8. 
57 Ibid., Sept. 18, p. 6. 



FOOD 



193 



if they made any at all. There was, he said, no longer 
any point in debating the wisdom of three-fourths fat- 
tening; supplies sufficient for anything else could not be 
had. Whereas the live stock of the country usually 
consumed over eleven million tons of feeding stuffs, this 
year there would be available only about six million tons, 
and the greater part of this would have to be devoted to 
dairy cattle. In many parts of the country preparations 
for winter feeding were suspended, neither cake nor 
stores being purchased. ^^ 

In view of the almost universal disapproval of his 
prices. Lord Rhondda yielded somewhat. On October 
9 he announced that the War Cabinet had responded to 
the appeal of the farmers. The November and Decem- 
ber prices of 67 s. per live cwt., instead of being reduced 
to 60s. on January i, 1918, would be continued until 
July I. After that the 60s. maximum would become 
operative.^^ 

While the farmers were thus voicing their protests, 
the Government on August 29 adapted its schedule of 
prices for army beef to beef for civilian consumption and 
added regulations affecting retail prices. The new 
schedule maxima were for dead weight rather than live 
weight, but were otherwise like those already announced. 
Retail prices were to conform to them. No retailer 
might sell beef at prices higher than those which he had 
paid by more than 2^^ d. per lb. or by more than 20 per 

58 Ibid., Oct. 6, p. 8. 
69 Ibid., Oct. 10, p. 7. 







194 



WAR TIME CONTROL OF INDUSTRY 



cent, on his fortnight's purchase, whichever increase 
might be the smaller. All expenses, as well as profits, 
were included in this permitted increase. Inasmuch as 
local conditions of purchase would differ, the Local Food 
Control Committees were empowered to fix schedules of 
maximum retail prices for the various points in their 
respective localities. If any butcher, relying upon a 
large turnover, was already content with a smaller mar- 
gin of profit than the one announced, the Local Food 
Committee should fix prices on this basis. The prices 
fixed butchers must keep posted in their shops.^*^ For 
another reason retail prices in different localities might 
differ. If, for instance, a West End butcher in London 
were to sell his choice cuts at a high price, he would have 
to sell the other parts of the carcass at a low rate to 
keep within the average price prescribed by the order. 
In working class districts where the demand is for 
cheaper cuts, the better ones could be sold at a relatively 
moderate price.^^ It was estimated that the average re- 
tail price for home-killed beef and mutton would work 
out at about i s. 3>^ d. per Ib.,^^ and during the month 
of September prices for domestic beef and mutton did 
decline by ij4 d. and 2(1. respectively.*^^ Retailers and 
consumers expressed satisfaction with the Government's 
new measure. 

<50 Ibid., Sept. 3, p. 8; Oct. 22, p. 3. 

61 Ibid., Sept. I, p. 7. 

62 Ibid., Aug. 31, p. 8. 
es Ibid., Oct. 16, p. 3- 



FOOD 



195 



) 



) 



The situation, however, from the national point of 
view remained serious enough, as Mr. Prothero pointed 
out. If account were taken of all two-year old cattle 
available on September 4 and allowance made for their 
reduced weight and for the usual number of cows added 
to them from the dairy herds, the 45,000,000 lbs. of beef 
normally consumed to the time when cattle again begin 
to come off the summer grass could, indeed, be supplied. 
But in May or June of 19 18 beef and mutton were likely 
to run short. This contingency could be avoided by 
the slaughter of an increased number of cows, heifers, 
or veal calves — a dangerous proceeding; it could be 
forestalled by the importation of more beef, a resource 
which did not lie in English hands ; it could be obviated, 
finally, by a reduction in consumption, the only remedy 
which was safe and within control.^^ The last word 
here, as with other kinds of food and as with coal, wool, 
and leather, was an appeal to the customer. Mainly by 
his economy could the crisis be met and the situation 
saved. 

At the same time that the Government exerted its 
control over the domestic nreat supply by fixing maxi- 
mum prices for beef, mutton, and pork, it turned also to 
the imported supply of bacon, ham, lard, and butter. 
Prices of these commodities were less amenable to con- 
trol. The best that the Government could do w^as to 
repeat its exploits relative to sugar and wheat. It could 

6* Ibid., Oct. 6, p. 8. 



1 



196 



WAR TIME CONTROL OF INDUSTRY 



itself enter the market as purchaser and could so distrib- 
ute the imported product that the public would pay no 
undue middleman's profit. 

The situation regarding bacon was in the early au- 
tumn of 19 1 7 acute, and it seemed impossible by any 
device to avoid temporary shortage. Supplies from 
Sweden and Holland had been almost cut off, while those 
from Denmark had been materially curtailed. In North 
America, which would now have to be largely relied upon, 
the number of hogs had been reduced, and the home de- 
mand for them had increased owing to army needs.^^ 
To facilitate purchases of bacon, ham, and lard there, 
the Ministry of Food from Septeml>er 3 began to buy 
through a single agency. At home a Meats and Fats 
Executive, modelled on the lines of the Royal Wheat 
Commission, was created to buy bacon, ham, lard, but- 
ter, and cheese for Great Britain, France, and Italy. At 
once it secured several thousand tons of bacon and soon 
it had a mission under w^ay to set up in New York its, 
permanently organized executive.^^ 

The supplies once secured, the Government prepared 
to distribute them through the ordinary channels, allow- 
ing suitable profits as commission. Since March, the 
prices of bacon, ham, lard, and butter had been deter- 
mined by importers', manufacturers', and curers' prices, 
set every fortnight. The Government now proposed, as 
from August 30, to fix maximum importers' prices, 

«5L. T., Oct. 2, 1917, p. 3. 
«eibid., Sept. 27, p. 3. 



FOOD 



197 



\ 



, 



\ 



I 

i 



prices which would necessarily vary as foreign market 
conditions changed. Wholesalers and retailers, too, 
were called in to advise about the determination of whole- 
sale and retail prices. In short, the regulation already 
formulated for the prices of domestic meat was, so far as 
possible, to be extended to imported meat products. 

By the end of 19 17, therefore, the state's control of 
the meat trade was as complete as it well could be. Be- 
ginning in 191 5 with the purchase of imported meat for 
the army, the Government, by requisitioning all insu- 
lated shipping space, assumed control of most of the 
beef and mutton imported into the United Kingdom. 
When in 191 7 domestic beef was also needed for the 
army, the Government indicated the prices which it 
would pay. Owing to the complaints of consumers 
about the high cost of meat, it extended these prices to 
domestic meat produced for civilian needs, and restricted 
carefully the profits of wholesalers and retailers. 
Lastly, to protect the consumer still further, it created 
an agency for the purchase of bacon, ham, and lard in 
New York, and took measures that no middleman or re- 
tailer at home should make more than commission profits 
on these imports. The risk run by fixing prices for 
domestic meat was the possible falling off of production ; 
of this danger the Government at the end of 191 7 was 
sensible, and on account of it gave to the prices set for 
beef, mutton, and pork most careful consideration. Its 
next step promised to be an attempt to conserve the meat 
supply by restricting consumption. 



198 



WAR TIME CONTROL OF INDUSTRY 



BREAD 

Since the price of bread depends upon the cost of 
flour and the price of flour upon the cost of wheat, the 
three commodities may be treated as one subject. In- 
creases in the price of wheat will be accurately reflected 
in the prices charged for flour unless there is profiteering 
on the part of the millers; increases in the price of 
flour will be accurately reflected in the prices charged for 
bread unless there is profiteering on the part of the bak- 
ers. If, on the other hand, the prices of bread advance 
less rapidly than do those of flour and the prices of flour 
less rapidly than do those of wheat, the explanation is 
that stores of wheat and flour have been bought by con- 
tract on relatively favourable terms and have been sold 
at prices based on those terms. This has happened in 
England during the war. By October, 19 16, it came to 
pass that the price of wheat had advanced since July, 
1914, by 130 per cent., the price of flour by 100 per cent., 
while the price of bread had advanced by only 65 per 
cent.^^ There would seem to have been no profiteering 
here; and it crept in only if supplies, bought at relatively 
low prices, were sold at a high profit, yet one which, even 
so, was less than the ruling market price would have 
warranted. 

Great Britain imports roughly four-fifths of the 

®^ Cd. 8483. Second and Third Reports of the Committee of the 
Board of Trade to Investigate the Principal Causes which have led 
to the Increase of the Prices of Commodities since the Beginning 
of the War. Nov. 15, Dec. 30, 1916. 



FOOD 



199 



wheat and flour which her people consume. At the out- 
break of the war the exportation of these commodities 
was, therefore, prohibited. Since it was known that 
the supply of them in the country was low, an excited de- 
mand none the less arose and quickly had its inevitable 
effect on prices. When, however, the Board of Trade 
called together men who could influence retail prices of 
foodstuffs, lending its own sanction to their action, prices 
were in turn steadied.^^ Moving in this manner, the 
spot price of standard wheat (No. i Manitoba) rose and 
fell in London. From January to July, 19 H, it had 
averaged 37 s. per quarter (8 bushels or 496 pounds) ; 
but early in September it advanced to 50 s., only to fall 
back by mid-October to 44 s. 

From October, however, there began a rise in the 
price of wheat, which was not counteracted until the fol- 
lowing May. During the intervening period wheat sold 
at 73 s. 6d. the quarter, an advance of 100 per cent, 
over the average price of the first half of 1914.^^ Al- 
ready in February, 1915, complaint was loud and called 
forth a debate in Parliament. Mr. Asquith there ad- 
mitted that the price of wheat had increased relatively 
more than that of any other necessity of life except sugar. 
If comparison were made with the prices of a year be- 
fore, i. e., those of February, 1914, wheat would be found 
to have risen 72 per cent, flour 75 per cent., sugar 72 per 
cent., British meat 6 per cent., foreign meat 12 per cent., 

68 Cf ., above p. 168. 
6«» Cd. 8483. 



200 



WAR TIME CONTROL OF INDUSTRY 



coal 15 per cent. In the case of wheat the change was 
due to increased demand and deficient supply. To this 
many factors had contributed. Men in the new armies 
ate more than they had eaten in civil life; Italy, Hol- 
land, and France had bought abnormally; the Australian 
crop was poor, Australia even becoming an importing 
country; parts of France and Belgium had been devas- 
tated; the Government of India had put a temporary 
embargo upon the exportation of wheat; bad weather 
conditions had delayed the arrival of the crop from Ar- 
gentina; above all, the closing of the Dardanelles had cut 
off the Russian crop so that some 10,000,000 quarters of 
wheat were lying in Russian ports. Difficulties of trans- 
portation and the rise of freights, the Premier thought, 
were only subsidiary causes."^^ As to the charge that 
supplies had been withheld from consumption, the Board 
of Agriculture and Fisheries declared that periodical re- 
turns collected since the outbreak of the war showed 
nothing of the kind. In January stocks were almost ex- 
actly the same as a month before, and English wheat had 
been freely offered until the bad weather of December 
hindered threshing J ^ 

Before the high prices of the spring of 19 15 began to 
recede, however, the balance sheet of a large firm of 
millers in South Wales, the firm of Spillers and Bakers, 
was published. The figures were sensational. After 
paying its dividends on preference and ordinary shares 

^0 p. D. C, 191S, LXIX, 759-765. 
^1 B. T. J., Jan. 14, 1915, p. 100. 



FOOD 



201 



(preferred and common stock), the company disbursed 
in extra dividends £80,165, or 17 J^ per cent, on the ordi- 
nary shares. Yet there still remained from the year's 
earnings £248,419, a sum which represented a further 
return of 54 per cent, on the ordinary shares."^ ^ To the 
public temper, already exasperated by the increasing 
cost of living, the abnormal profits thus disclosed seemed 
convincing evidence that profiteering in food was no 
myth. Mr. Runciman could only admit the existence of 
these profits while he deplored them. As late as Sep- 
tember, he reiterated his conviction that the millers as a 
body had behaved not improperly. Some of them had 
made a good deal of money owing to forward contracts 
of the autumn of 19 14, but it was not unlikely that these 
same men would lose a good deal as a result of the heavy 
fall of prices which had already taken place when he 
spoke.^^ Despite the protestations of the President of 
the Board of Trade, the popular mind long remembered 
that, while many of the poor were hard pressed to pay 
for food in the winter and spring of 1915, certain deal- 
ers in wheat and flour had reaped larger profits than ever 
before. 

Apart from all questions of profiteering, however, the 
situation at the end of 191 4 was serious enough from the 
national point of view. So it appeared to the Cabinet 
Committee which, from the beginning of the war, had 
given close attention to the nation's store of wheat. 

72 L. T., May 3, 1915, p. I4- 

"P. D. C, 1915, LXXIV, 488; LXXII, 420. 



k 



202 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



203 



Now that there was still risk of an interruption of traffic 
across the Atlantic, the surplus could not be allowed to 
fall to a two- or three-weeks' supply. The Government, 
therefore, decided to purchase a national reserve. From 
November, 19 14, until the following February, secretly 
and through the agency of a single firm, a new Grain 
Supplies Committee bought extensively in the United 
States and Argentina. All told, it purchased some 
3,000,000 quarters of wheat and large quantities of flour. 
This method of acquisition, which involved bidding 
against home importers, later called forth criticism; but 
in defence it was urged that such large purchases were 
at best bound to stimulate prices, that the Government 
had acquired nearly all its store before its buying was 
realized, and that events at length fully justified the 
wisdom and the extent of the enterprise.*^^ Throughout 
the spring of 19 15 the nation at least knew that its food 
supply was not imperilled, while the stores held by the 
Government could, it was felt, be at any time released to 
steady prices. This feeling that such release might take 
place had not a little to do with the easier quotations of 
the early summer of 19 15. 

What actually did most to relieve the situation at that 
time, however, was the arrival of part of the abundant 
Indian wheat crop. The price of this had been regulated 
by the Government of India, which in March, 19 15, co- 
operated with the home Government to have the export- 
able surplus shipped to England. In England, the Gov- 

7* Cd. 8483 ; P. D. C, 1916, LXXXVI, 501. 



v. 



emment turned all the firms engaged in importing Indian 
wheat — some half-dozen there were — into Govern- 
ment agents, paying them a commission but allowing 
them no other profit. In this way 2,500,000 quarters 
of wheat were acquired and distributed.*^^ 

By the time that the cargoes reached England, the out- 
look had improved in still other directions. The grow- 
ing American crop promised well and eventually proved 
to be an enormous one; there was high hope that the 
Dardanelles expedition might be successful in opening 
the Black Sea and liberating its stores. Prices reflected 
the optimism. From June until November wheat fell 
back to a range of from 56 s. to 60 s. the quarter ."^^ 
Complaints about the high cost of living were quieted, 
and the Government seized the opportunity to provide 
storage facilities in case another emergency should arise. 
Since England and Wales had small storage capacity, 
Lord Selborne devised a scheme and made arrangements 
with a British trade buyer w- hereby large quantities of 
wheat might be piled up. So excellent was the organi- 
zation that henceforth the Government could hold on its 
own account extensive supplies without inconveniencing a 
single port or warehouse."^^ 

Not until the early winter of 191 5-16 did the situation 
again become ominous. Then from December to Feb- 
ruary the price of wheat once more rose from 58 s. 6 d. 

75 p. D. C, loc. cit. 

76 Cd. 8483. 

77 P. D. C.„ loc. cit., p. 502. 



204 



WAR TIME CONTROL OF INDUSTRY 



to j}^ s. The Government perhaps to a sHght degree 
contributed to this advance by again entering the market 
as a purchaser. Most of its buying, however, was done 
after the rise had taken place, and this time at least it 
did not compete in its purchases with the Allies. At the 
end of the year it had suggested to the French and Italian 
Governments that co-operative buying was preferable to 
competition, and a joint committee had been appointed 
to sit in London and make the requisite purchases. 
Henceforth this Committee met daily and its agent acted 
for the Allied Governments."^^ 

What pretty clearly lay behind the rising prices of 
wheat and flour at this time was not so much Govern- 
ment buying as the advance in freight charges. From 
August, 19 1 5, such charges rose rapidly until the New 
Year."^^ At once the price of wheat responded and after 
August was higher in London than it was in New York. 
In November, 19 15, the Government formed its resolve 
to requisition shipping space. In due course the Requi- 
sitioning (Carriage of Foodstuffs) Committee made ar- 
rangements whereby liners and a considerable number of 
cargo steamers plying to North America were to offer 
from 50 per cent, to 75 per cent, of their cargo space for 
the carriage of wheat and flour. The new freight rates 
were greatly below the old ones and the price of wheat 
declined some 35 per cent, until in June, 1916, it stood 
at 48 s. 6 d. Government requisitioning of shipping had 

78 p. D. C, 1916, LXXXVI, 19. 
■^s Cf . above p. 145. 



FOOD 



205 



been as effective in preventing a crisis as had Government 
purchasing of wheat. 

Unfortunately after July, 1916, a new set of circum- 
stances became operative. The year's wheat crop in the 
United States had been overtaken by disease, that of the 
Argentine was suffering from drought, and the harvests 
of Canada, India, and the United Kingdom were rela- 
tively poor, the last having fallen off by more than one 
and one-half million quarters. Only in Australia was 
the promise good and Australia was very far away. 
Again the price of wheat rose until in October it stood 
at 86 s. per quarter. The four-pound loaf of bread, 
which before the war sold for about 5% d., by November 
sold at between 9 d. and 10 d.^^ At the Trade Union 
Congress of September high prices were regarded as the 
most pressing of grievances, and a resolution was adopted 
urging the Government either to fix maximum prices or 
to assume full control over supplies.^^ 

So serious had the situation become that in October 
another decisive step in state control was taken. A 
Royal Commission was appointed *' to inquire into the 
supply of wheat and flour in the United Kingdom, to 
purchase, sell, and control the delivery of wheat and 
flour on behalf of His Majesty's Government, and gen- 
erally to take such steps as may seem desirable for main- 
taining the supply." ^^ The intermittent action of a Grain 

80 Cd. 8483. 

81 M. G., Sept. 9, 1916, p. 8. 

82 B. T. J., Oct. 12, 1916, p. 91. 



2o6 



WAR TIME CONTROL OF INDUSTRY 



Supplies Committee, which bought reserves in emergen- 
cies but left the regular trade in private hands, was to be 
superseded by the continuous control of a body which 
would largely if not altogether take charge of the im- 
portation of wheat. The Royal Sugar Commission was 
to have its counterpart. 

Anticipating the creation of the Commission, the Gov- 
ernment made a large purchase. It bought 550,000 tons 
of Australian wheat, paying therefor £4,000,000. Dur- 
ing the preceding season the world's competition for 
tonnage had been greater than its eagerness to buy wheat, 
and the Commonwealth Government had purchased the 
whole of the native crop. From such full granaries the 
home Government might draw, if only it could provide 
shipping facilities. It was not, to be sure, economical to 
import grain from Australia, since the ratio of freight 
charges to the price of wheat was one-third, whereas in 
the case of North American wheat the ratio was one- 
fifth. Uneconomical, however, the Government was 
forced to be, and shipping facilities had to be found. 

For nearly a year the Requisitioning (Carriage of 
Foodstuffs) Committee had been providing trans-Atlantic 
tonnage with excellent results. The new Royal Com- 
mission, accordingly, continued its policy, appropriating 
for the state much of what had once gone as profits to 
individual importers. One change it made: variable 
rates of freight gave way to fixed ones. Thereby state 
requisitioning of shipping at blue-book rates became a 
completely accepted policy and the consumer could be as- 



FOOD 



207 



sured that so far as British shippers were concerned, no 
undue profits in grain intervened between the producer 
and himself. How much was saved on transportation 
became apparent from payments made to certain neutral 
vessels, which to increase the tonnage were also chartered. 
Mr. Runciman designated these freights as " gigantic," 
and remarked that, if the Government had had to pay 
open market rates, the charge would have been 50 per 
cent, higher than what it was paying.^^ 

To avoid the risk that the Government might not buy 
wheat as advantageously as private merchants, particular 
attention was given to the personnel of the Commission. 
It was not drawn haphazard from the House, but was 
appointed, as the staff of a great firm is selected, with an 
eye solely to business efficiency. To it were called not 
only men familiar with the Argentine and America, but 
others who deal with more distant regions and still others 
who know about the distribution of grain at home. In 
the early days of its existence when its tasks were urgent 
and burdensome, it sat daily — morning, noon, and 
night.®* In November the Canadian Bankers' Associa- 
tion offered to extend to it a six-month's credit of $20,- 
000,000 for the purchase of Canadian grain.®^ In De- 
cember it signed on behalf of the Allies a contract for 
3,000,000 additional tons of Australian wheat. If the 

88 p. D. C, 1916, LXXXVI, 19; LXXXVII, 843; M. G., Oct. n, 
1916, p. 5. 
84 Ibid., LXXXVI, 501. 
«5 M. G., Nov. 28, 1916, p. 4- 



208 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



209 



prices paid in the two Australian transactions, 32 s. and 
38 s. per quarter free on board, are compared with the 
market price of wheat in London, 86 s. in October, it 
will be seen how advantageously the Commission was 
able to buy.^^ To its low contract prices there had to be 
added only the blue-book freight rates of requisitioned 
vessels. The chairman of the large milling firm of 
Spillers and Bakers in July, 191 7, complimented the Com- 
mission. It had, he said, "dealt with a very difficult 
task in a manner which could only be impugned by the 
most carping critic." ^^ 

Certain criticisms relative to the Commission were of- 
fered in Parliament by Mr. Barnes at the time of its 
creation. Besides experts, representatives of bakers and 
of consumers might well have been appointed to it; there 
should be no doubt about its right to purchase the entire 
imported wheat supply; particularly it ought to be able 
to buy home wheat at a fixed price. More than two 
years before, Mr. Barnes continued, a deputation of trade 
unionists, co-operators, and others representing labour 
interests had waited upon the Government and had urged 
not only the step just taken relative to foreign wheat but 
the further purchase of the home crop. Even since then 
food speculators, including the British farmer, had been 
lining their pockets with the pickings of the poor man's 
loaf. Inasmuch as labour was now tied up in particular 
workshops under the Munitions of War Act, why should 

86 L. T., Jy. 17, 191 7, p. 10. 

87 Ibid., Jy. 30, p. 12. 



1 



not the economic principle be extended and the farmer 
dealt with on similar lines ? ^^ 

The question of the wheat grown by the British farmer 
was, however, hedged about with difficulties. To restrict 
the price of it might lead to a decline in the output, and a 
very serious decline of this sort had already taken place. 
In 19 1 6 the area under wheat in the United Kingdom had 
fallen off by 250,000 acres and a further falling off of 
500,000 acres in 191 7 was predicted. Should this take 
place, the total decrease in output would be some 2,600,- 
000 quarters. To import an equivalent amount from 
Australia would require 100 ships of 5000 tons for four 
and one-half months.^^ In view of the scarcity of mer- 
chants ships at the end of 19 16, it is comprehensible that 
the Government was not then inclined to discourage the 
British farmer by a limitation of his profits. Before a 
year had passed, it took measures, as will appear, to stim- 
ulate him to increased production. 

If the Government was unable at the moment to ac- 
cede to the labour demand that the price of British wheat 
be fixed, it did within a month adopt another policy which 
had found favour in the same quarter. On November 
15, 1916, Mr. Runciman announced in the Commons that 
there would be created a Ministry of Food with a Food 
Controller at its head. Commissions had come into be- 
ing, he explained, to deal with the sugar supply, the im- 
ported meat supply, the imported wheat supply, while 

88 P. D. C, 1916, LXXXVI, 436, 437. 

89 Ibid,, 458. 



2IO 



WAR TIME CONTROL OF INDUSTRY 



branches of various departments dealt with mercantile 
transactions. But there was no co-ordinating hand. As 
the problem expanded, the Government felt more and 
more that some minister must be free to deal with noth- 
ing but food problems and to co-ordinate all related ac- 
tivities of this kind. Drastic powers, too, looking in new 
directions would be conferred upon the new minister. 
Bit by bit, added Mr. Runciman, the Government had 
been driven to such a policy against the will of many of 
its members, himself included. But the easy flow of 
voluntary operations could no longer be depended upon.®^ 
Next day, November i6, the new powers referred to 
were announced by an Order in Council, and were em- 
bodied in regulations 2F and 2G under the Defence of 
the Realm Act. These provide that whenever the Board 
of Trade are of the opinion that special measures should 
be taken to maintain the supply of any article important 
for the food or for the wants of the nation, it may apply 
any one of the following provisions, generally or locally. 
Foods of national importance may not be wasted or 
unnecessarily destroyed ; the uses to which they shall or 
shall not be put may be defined; the manner of their 
manufacture may be prescribed; the mode of their sale 
and distribution throughout the country may be deter- 
mined; to prevent unreasonable inflation of prices, market 
operations in them may be regulated; their prices may 
be fixed, i. e., the amount by which the price of any of 
them may exceed its corresponding price at a specified 

90 Ibid, LXXXVir, 856, 858, 862. 



FOOD 



2X1 



I 



date; supplies of them may be requisitioned by the Board 
of Trade; and full information as to existent stocks of 
them may be required.^^ The bill creating the new min- 
istry was not introduced and passed until a month later, 
when Lord Devonport became Food Controller; but in 
the interim several orders carrying out the new regula- 
tions were issued by the Board of Trade. Hitherto gov- 
ernmental interference in the food supply had been lim- 
ited to the control over sugar and to the purchase of im- 
ported meat and imported wheat. Now, however, a new 
period opens and governmental restrictions of a varied 
kind begin to be imposed. 

Under the new regulations, orders of three general 
sorts were issued. The first series looks toward economy 
through the introduction of cheaper constitutents into 
food, various sorts of war bread being prescribed for all 
consumers. Orders of another sort urge economy in 
consumption and the avoidance of waste, being always 
likely, if poorly observed, to culminate in rationing 
schemes. Orders of the third sort endeavour to protect 
the consumer by the fixing of prices and by the preven- 
tion of speculative operations on the market. For con- 
venience in following the intricate history of a year of 
food regulation, each group will be considered separately. 

On November 20, 19 16, the first order under the new 
regulations was issued, and became operative a week 
later. It provided that henceforth certain percentages 

91 D. F. M., Regulations 2F and 2G; B. T. J., Nov. 23, 1916, pp. 
566-568. 



212 



WAR TIME CONTROL OF INDUSTRY 



of flour, higher than the customary ones, must be ex- 
tracted from the various grades of wheat. At the be- 
ginning of the war Sir Francis Fox had urged that from 
100 tons of wheat not merely 70 tons of white flour 
should be milled, but 8>8 tons. The product, too, would, 
he declared, be more nutritious.^2 According to the new 
order, English wheat must thenceforth yield a " straight- 
run," i. e., 76 per cent, instead of 70 per cent, of flour, for 
which reason this first milling order came to be known to 
the trade as the " 76 per cent, order." On and after 
January i, 1917, only flour so milled might be used for 
making bread or any other article of food, and the Board 
of Trade warned to this effect those who were said 
to be accumulating stores of the whiter flour for private 
consumption.^3 j^-^ ^^^^^ ^^^^ .^^ accord with the 

recommendation of certain members of the committee 
which was investigating the increased prices of commodi- 
ties, and which made its report relative to bread, flour, 
and wheat on November 15.^4 The measure was the 
first step taken toward the creation of a war bread. 

On January 29, 19 17, a new order made compulsory 
the extraction of 81 per cent, instead of y6 per cent, from 
English wheat, or, barring this, the addition to the 76 per 
cent, of a further 5 per cent, of flour made from barley, 
rice, maize, semolina, oats, rye, or beans. By an order 
of February 24, the alternative was withdrawn. From 

»2L. T., Aug. 17, 1914, p. ir. 

»3 B. T. J., Nov. 23, 1916, pp. 570-571. 

»* Cd. 8483. 



' 



FOOD 213 

the wheat milled, 81 per cent, of flour must be extracted 
and 5 per cent, of the inferior grain must also be added. 
A further admixture of 10 per cent, was permitted.^^ 
Again on April 10 the percentages were raised. To the 
81 per cent, wheaten flour, 10 per cent, from an inferior 
grain must be added and 25 per cent, might be.^^ Finally, 
on May 10 the constituents of war bread were definitely 
regulated. With the 81 per cent, wheaten extraction, 20 
per cent, of inferior flour must be mixed and 50 per cent, 
might be.^^ In the same month a Scotchman outdid the 
Government. In London he produced a bread which 
contained only 20 per cent, of wheaten flour, the re- 
mainder being a mixture of oaten flour and rolled oats. 
It was said to keep well and to improve with keep- 
ing.^^ 

To supervise the carrying out of the new regulations 
the Government at the end of April took over all the flour 
mills in the United Kingdom and appointed a Mills Con- 
trol Committee. Particularly was the new Committee to 
see that millers used whatever inferior grain was most 
readily procurable in any district. Chinese horse-beans, 
for example, were at the moment abundant in London, 
maize more available in the North and West. The 
millers had been inclined to secure whatever grain was 
cheapest, regardless of how far they might have to trans- 
port it. If the Committee should be successful in stop- 

»5 B. T. J., Mar. i, 1917, p. 612. 
86 Ibid., Apr. 12. 
»7 L. T., Jy. 30, 1917, p. 13. 
«8 M. G., May 21, 1917, p. 4. 



214 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



ping this practice, it was clear that a part of the burden 
of the railways would be lifted.®^ 

The new bread was far from being an immediate suc- 
cess. Although the millers in general observed the order 
for an 8 1 per cent, extraction and a 20 per cent admix- 
ture, their mills were unaccustomed to the inferior grains 
and they found it hard to reduce them to the requisite 
fineness. They were further not required to label their 
product so as to show the percentage of admixture. 
The bakers, in consequence, saw a flour of unknown 
quality coming into their hands and they quickly pro- 
nounced this quality most unsatisfactory. Owing to the 
presence of more coarsely-ground grains, the texture of 
the bread was close and moisture was unduly retained. 
In warm weather the loaf consequently became *' ropey " 
and inedible. At the end of June, the London Master 
Bakers' Protection Society by resolution requested the 
Prime Minister to prevent the great waste which was 
being occasioned through the use of inferior flour. 
Thirty-three of their number complained of waste during 
the last fortnight, while two bakers had been compelled to 
destroy 1500 loaves, not being allowed to feed them to the 
pigs. The bread at best was too harsh for children and 
elderly people. To a straight run or to the separate 
milling of the other cereals there would be no objection. 
Inasmuch as dilution had varied greatly in different re- 
gions (from 20 per cent, to 50 per cent.), some standard- 
izing was most desirable.^ 

»9 B. T. J., Je. 29, 1917, p. 204; L. T., May 5, 1917. 
1 L. T., Je. 29, 1917, p. 3. 



215 



On July 10, Mr. Anderson speaking for the Ministry 
of Food defended the w^ar bread. Although many 
millers had not yet well adapted themselves to making 
the mixed flour, most of them had. The digestibility of 
bread in which considerable maize is used had been in- 
vestigated before the order was issued, and the tendency 
of bread to become ropey is not directly due to the ad- 
mixture of inferior flours. " Rope " is caused by germs 
(bacilli maesenterici) generally present in dirt or dust 
and usually on the outer husk of wheat. Though almost 
always found in flour, these germs increase in number 
through closer milling and by the use of inferior grains. 
Normally harmless, they may under certain circumstances 
cause fermentation and make the bread ropey and un- 
wholesome. The recent prevalence of rope was probably 
due to the warmth and moisture of exceptional weather. 
Admixture of inferior grains could not be dispensed 
with, since only by their use could the supply of flour be 
maintained while shipping facilities were restricted. 
Nor was standardization feasible. Different grains are 
more easily got at different places and should be utilized. 
During the next few months there would not be much 
maize, but when the pinch came later it was hoped that 
there would be an abundant supply from America.^ 

A similar answer was returned to the National Associa- 
tion of British and Irish millers, who on July 4 petitioned 
that the flour extracted from wheat be reduced from 81 
per cent, to 76 per cent. The Association was assured 

2 Ibid., Jy. 10, p. 3. 



I 



2l6 



WAR TIME CONTROL OF INDUSTRY 



that careful investigations were still in progress as to food 
values and that relatively small adjustments in milling 
would obviate many difficulties. The Allies would have 
ground for complaint if the British Government made 
concessions which they themselves could not afford It 
would, nevertheless, happen for a time that wheat would 
be more extensively used. While the supply of maize 
was running low, stocks of wheat in the country had been 
increased, owing to the activity of the Royal Commission, 
and might safely be drawn upon.^ 

The milling of white flour or even " straight-run " 
flour was thus definitely forbidden in Great Britain. 
White flour was no longer to be had, and for those who 
wished wheaten flour only the imported product remained 
Complaint arose that the supply of this was passing 
largely into the hands of the wealthier classes. But Mr. 
Clynes stated in the Commons that the Food Ministry 
had not found it so, but that the demand came as well 
from the mining and industrial districts. What imported 
flour there was, the Ministry was distributing impartially. 
The new 9 d. loaf would make it impossible for private 
holders of such flour to sell at a profit, and, as a matter of 
fact, stocks of it in private hands were very small.-* By 
August I the Food Controller announced that precautions 
had been taken to deal with the improper use of im- 
ported flour and that the Royal Commission had recently 
assumed control of all supplies arriving in the country.^ 

8 Ibid, Jy. 19, p. 3. 

* Ibid, Jy. 25. 

« Ibid, Jy. 30, p. 13. 



FOOD 217 

Two weeks later the Premier congratulated the Com- 
mons on the success of the war-bread measures. Closer 
milling, he said, had saved 70,000 quarters of wheat 
weekly, or one-seventh of the total consumption.^ From 
this time, too, little complaint is heard of the quality of 
the bread. Either the nation had become accustomed to 
it or millers and bakers had learned to make it more sat- 
isfactorily. The Government's action had been vindi- 
cated. 

Along with governmental orders prescribing the 
quality of bread which might be eaten, there appeared 
another series looking toward economies in consumption 
and toward the elimination of waste. Not only were 
official orders issued to this end from the close of 1916, 
but appeals for voluntary action became urgent. The 
orders were directed toward brewers and proprietors of 
public eating-places ; the appeals were made to all house- 
holds in the land. 

Most obvious of all economies was a reduction in the 
brewing of beer. In 1914, 36,000,000 barrels of this 
beverage were brewed in the United Kingdom. Since 
after that time men were continually departing for the 
front and since little beer was exported to France, the 
Government early in 1916 restricted the brew for the 
year to 26,000,000 barrels.^ Again, in January, 1917, 
when shortage of shipping and of food was imminent, 
further restriction seemed desirable. It was pointed out 

« Ibid, Aug. 17, p. 8. 

^ L. E., Feb. 17, 1917, p. 309. 



2l8 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



in the Commons that during the first twenty months of 
the war 1,400,000 tons of shipping had been required to 
convey materials for brewing and distiUing and that 
300,000 tons of sugar had been used in brewing.^ Lord 
Devonport explained that the proposed measure was 
not one of temperance or social reform but that the issue 
was " bread " vs. " beer." The amount of beer which 
might be brewed was, accordingly, reduced by 30 per 
cent., and for the 36,000,000 barrels of 19 14 were sub- 
stituted 18,200,000 barrels. The saving from this 30 per 
cent, reduction, Lord Devonport explained, would be 
286,000 tons of barley, 36,000 tons of sugar, 16,500 tons 
of grits, to say nothing of the cost of transport, labour, 
and fuel. The barley saved would yield 50 per cent, 
flour, while the farmer would get 40 per cent, instead of 
25 per cent, of the barley offals.^ By an order of March 
29 a final reduction to 10,000,000 barrels for the year 
was enjoined, an amount which was less than 30 per cent, 
of that brewed annually before the war.^^ 

This last measure sent up the retail price of beer so 
violently that it now exceeded the pre-war price by 100 
per cent, or 150 per cent. At a public house in Clapham 
customers, being asked nearly double the price of the pre- 
ceding week, refused to pay and walked out without 
touching the liquor served. ^^ During the summer the 
consumer's discontent grew and was reported by the Com- 

8 P. D. C, 1916. LXXXVII, 911. 
»L. T., Jan. 25, iQi?- 
iP B. T. J.. Apr. 5. 1917, p. 18, 
11 L. T., Apr. 4, 1917, p. 3- 



219 






mittee on Industrial Unrest. Mr. Ben Tillett, secretary 
of the Dockers' union, wrote to the Premier pointing out 
the danger of curtailing the workingman's supply of 
beer and stating that already many men in the union had 
refused on this account to work overtime or on other than 
certain days in the week. He advocated the brewing of 
26,000,000 barrels of beer at a specific gravity lower than 
the one prevailing. There was plenty of foreign malt 
and barley in the country, he asserted, that could be 
utilized for brewing light beers.^^ Thus warned, the 
Government gave the subject attention and soon took 
measures to provide more beer of light specific gravity for 
munitions workers and others engaged in heavy work. 
Already it had granted an increased allowance of beer for 
the hot months and now considered the extension of the 
privilege for three months longer.i^ The two restrictive 
measures of the spring were thus modified and the con- 
sumers of beer conciliated. 

A second method of economizing foodstuffs, enforced 
by the Government, had reference to public meals. Al- 
though at the beginning of the war the big hotels had 
cut down their menus,i* it was not until December 5, 
19 1 6, that uniform and more stringent economies were 
enjoined. By the Public Meals Orders of that date the 
Board of Trade prohibited the serving in public eating- 
places of meals which, between 6 :oo p. m. and 9 130 p. m., 

12 Ibid., Aug. 3, p. 3. 

" Ibid., Aug. 13, p. 3. 

" Ibid., Aug. 19, 1914, p. 9. 



220 



WAR TIME CONTROL OF INDUSTRY 



consisted of more than three courses or which at any 
other hour consisted of more than two courses. Plain 
cheese was not to count as a course and hors d'oeuvres, 
dessert, and soup were to count as half courses. ^^ The 
order was promptly enforced. In the Exeter police- 
court, for example, the landlord of the New London 
Hotel soon answered two summonses for having served 
meals of more than three courses at the dinner hour. 
The Bench dismissed the first charge on the payment of 
costs, but for the second imposed a' fine of lo s. and 
costs. ^^ 

After three or four months' trial the order was found 
to produce unsatisfactory results. All lighter and 
" made " dishes tended to vanish, the " art of the cook 
disappeared." People ordered solid courses and the 
consumption of meat increased. In April, accordingly, 
Lord Devonport issued a new Public Meals Order, based 
on the principle of rationing hotels by bulk and restrict- 
ing them to a weekly allowance. Houses frequented by 
the working classes, where the cost of a meal does not 
exceed is. 3d., were exempt. Other hotels and restau- 
rants were required to observe one meatless day each 
week, Tuesday in London, Wednesday elsewhere; they 
might serve no potatoes except on the meatless day and on 
Friday; to each customer they might allow daily only 12 
ounces of meat, 8 ounces of bread, 2 ounces of flour, and 
1/4 ounces of sugar. By this rationing it was hoped 

" B. T. J., Dec. 7, 1916. 
"L. T., Jan. 13, 1917, p. 6. 



FOOD 



221 



that the saving in meat, as compared with the consump- 
tion of November, would be 56 per cent. If comparison 
were made with the period since November the saving 
ought to be 65 per cent, in meat, 53 per cent, in bread, 63 
per cent, in sugar. ^^ 

Apart from the restriction placed upon the use of 
potatoes, a restriction due to a seasonal shortage of that 
vegetable, the new features in this scheme were the meat- 
less day and the food ration. The meatless day had 
already been adopted on February 27 by several Lon- 
don clubs. Rationing had been introduced more than 
two months before, but thus far had been of a purely 
voluntary character. On February 2 the Food Con- 
troller had issued his appeal. If every consumer would 
reduce his consumption of bread by one pound a week and 
of meat by one-half of a pound, over one million tons of 
these foods would be saved annually. All heads of 
households were therefore strongly urged to limit per 
capita consumption weekly to 4 pounds of bread (equiv- 
alent to 3 pounds of flour), 2j^ pounds of meat, and ^ 
pound of sugar. 18 i£ g^^ j^^^,j^ ^^^^ ^^^j^ ^^^ ^^ ^^_ 

forded, more bread might be used. By a further appeal 
of March 7 the allowance of bread was cut to 3>^ pounds, 
and in April that of sugar to J^ pound. Since on such 
a basis the United Kingdom would annually consume 
some 23 million sacks of flour (of 280 pounds each), 
whereas its normal consumption was more than 40 mil- 

17 Ibid., Apr. 5. 
" Ibid., Feb. 3. 



222 



WAR TIME CONTROL OF INDUSTRY 



lion sacks, the saving would be above 40 per cent. If 
allowance were made for the 20 per cent, compulsory 
admixture, the consumption of wheat would be reduced 
by more than 50 per cent.^^ 

After three months, however, it became apparent that 
the Food Controller's rations were not being generally 
observed. Some industrial centres like Keighley set an 
excellent example of organized economy, reducing the 
average weekly consumption per head to 3.07 pounds of 
flour, 2 pounds of meat, and .71 pound of sugar. North 
Wales did better than any other region of the United 
Kingdom. But South Wales stood in contrast and col- 
liery districts in general proved indifferent. Bread was 
wasted in school-children's dinner pails, which mothers 
filled too full, in army canteens, where the soldiers bought 
bread in addition to their rations, and at the Zoo, where 
people still fed their favourite animals. Round Chelms- 
ford agricultural labourers consumed on the average 14 
pounds a head per week.^^ The National War Savings 
Committee estimated that in the United Kingdom at large 
the consumption of bread fell off only 2 per cent, in 
March and 4 per cent, in April. ^^ 

In view of the comparatively slight initial success of 
the scheme, new measures were taken to enlist wider co- 
operation. The King made a personal appeal. By 
Royal Proclamation of May 2, 19 17, he exhorted all 

19 Ibid., Jy. 30, p. 13. 

20 Ibid., May i, p. 8. 

21 Ibid., Je. 2T. 



FOOD 



223 



men and women to practise the greatest frugality in the 
use of every species of grain, and he charged all heads of 
households to reduce the consumption of bread in their 
respective families by at least one-fourth of the quantity 
consumed in ordinary times, to abstain from the use of 
flour in pastry, and, wherever possible, to abandon its use 
in other articles of food than bread. Horses, he indi- 
cated, should be fed no oats or other grain save under 
permit, and permits would be given only to maintain in 
the national interest the breed of horses. ^^ 

The other measure adopted to rouse the public was the 
entrusting of the campaign for voluntary rationing to 
a War Savings Committee and to its 1200 local Commit- 
tees, similarly named. The organization of the latter 
was flexible and locally adaptable. Economizing schemes 
of many sorts were devised, the following, for instance, 
being tried at Swansea. The Market Superintendent 
was appointed " Intelligence Officer," and was instructed 
to keep in touch with master millers, food merchants, 
and fishmongers, publishing on the basis of information 
thus acquired a daily bulletin which would suggest sub- 
stitutes for foodstuffs. A central war kitchen and eight 
or nine ward kitchens were equipped with electrical and 
gas stoves, all for use free of charge. Cooking lectures 
and demonstrations were given by chefs of local hotels 
and by qualified teachers, both afternoons and evenings. 
To spread broadcast the King's appeal, copies of it were 
distributed at every cinema show. The pledge cards, 
22 M. G., May 3, 1917. 



224 



WAR TIME CONTROL OF INDUSTRY 



which the Central War Savings Committee was distribut- 
ing through all its local Committees, were sent to all 
places of worship and preachers asked hearers at the 
close of service to sign them.^^ For those who signed 
here and elsewhere the Government issued gold-coloured 
buttons bearing the words, " On Voluntary Rations." ^^ 
In London the Metropolitan Committee issued to London 
restaurants 10,000 placards on which were printed 
'' Don't waste bread. If half a slice is enough for you, 
please cut the whole slice in half ; do not break it. Every 
one must help to save bread. It is a national duty. Will 
you help?"^^ In Manchester a campaign for instruc- 
tion in cooking substitute foods was organized. In the 
windows of a teaching centre were displayed some forty 
kinds of cereals, many unfamiliar. The School of Do- 
mestic Economy furnished teachers. One week the lec- 
tures and demonstrations were on bread-making, the use 
of oatmeal, maize puddings, pastry and rice dishes ; next 
week the preserving of fruits and vegetables was demon- 
strated. A motor car, fitted up to give open-air demon- 
strations, could be secured by any local group in the city, 
which would advertise its coming.^^ Portsmouth sought 
assistance from the postoffice, the schools, and the 
distributing trades. The postofifice circulars were dis- 
tributed to every household, asking occupants to reduce 
consumption; the teachers in the schools gave lectures; 

23 L. T., May 11, 1917. 
2* M. G., May 8, 16, 1917. 

25 L. T., May 9, 1917. 

26 M. G., Je. 23, 26, 1917. 



FOOD 



225 



even the bakers, contrary to their interest, induced people 
to cut down consumption. As a result, this town of 
230,000 inhabitants reduced its bread consumption to an 
average of 3 pounds i ounce a head per week, nearly 
one-seventh less than the official allowance. In view of 
such an achievement a mass meeting of citizens demanded 
that, if compulsory bread rationing should be adopted, 
Portsmouth be exempt.^' 

The possibility of compulsory rationing reacted from 
the first upon the voluntary scheme. At the time of the 
inception of the latter Lord Curzon declared it probable 
that the nation would be driven to compulsory rations 
and that for his own part he thought they ought to 
come.^^ When Lord Curzon spoke, however, it was clear 
that bread cards or other means could not be devised and 
put into operation until two or three months later. 
Should the public observe the King's exhortation and re- 
duce the consumption of bread by at least one-fourth, 
the need for such devices, people saw, might not arise. 
That voluntary action should have its reward, a strong 
movement was soon on foot to exempt from any com- 
pulsory system which might be adopted such towns as 
imposed rations of their own will.^* Experiments even 
in retail rationing were tried. The Pendleton Co-op- 
erative Society with over 30,000 members provided 
each member with an order-book in which the principal 

27 L. T., Je. 25, 1917, p. 3. 

28 M. G., May 4, 1917, p. 4. 

29 L. T., May 5, 1917. 



22(> 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



articles of food were printed in weekly columns and shop- 
men were instructed to limit sales where they suspected 
that food was being bought in excess of a family's im- 
mediate requirements.^^ It was a premonition of the 
scheme later adopted for the apportionment of sugar. 

Owing to these various efforts, compulsory rationing 
was for the time avoided. While the consumption of 
bread and flour during May was practically the same as 
during May, 1916, in June there was a reduction of 3>^ 
per cent, and in July one of 7 per cent, over the figures of 
a year before. At least such was the first optimistic con- 
clusion of the Ministry of Food based upon returns from 
6000 retailers who represented from one-fourth to one- 
third of the consumers of the United Kingdom. These 
returns were confirmed by others relating to the delivery 
of flour from the mills. The reduction, it seems, had 
been more substantial in large towns than in country dis- 
tricts, greater in England and Scotland than in Ireland 
and Wales, greater in Lancashire, Yorkshire, and the 
North than in the Midlands and the South. There had 
been, too, a considerable reduction in the use of flour for 
industrial purposes.^^ 

These gratifying returns, however, were not borne out 
by later information. In September Lord Rhondda ex- 
pressed his disappointment at finding how slight had been 
the fall in the consumption of flour during the last two 
months. The supply of potatoes was then abundant and 

»o M. G., May 5, iQi?, P- 6. 
31 L. T., Aug. 21, 1917, p. 8. 



4 



227 



•^ 



I 



i^ 



4 



\ 



considerable substitution had been hoped for. The fact 
that some persons had saved more than a pound of flour 
a week showed that in many cases no effort whatever 
had been made.'^^ \^ ^^g clear, in short, that while the 
campaign for voluntary economy had had transient and 
local successes, it had achieved little more. 

Two circumstances now conspired to necessitate a re- 
newal of effort. In October, as will be explained, the 
Government put on the market a subsidized 9 d. loaf, 
thereby reducing the price of bread by one-fourth. Con- 
sumption, as w^as expected, increased. At the same time 
it became matter of public information that the world's 
cereal harvest of the year would be inadequate. The 
Government had, it is true, by summer purchases acquired 
a larger reserve of wheat than was on hand a year earlier. 
Instead of 6,480,000 quarters, there were in the country 
in August 8,500,000 quarters.33 But official information 
came from America that the United States and Canada 
would have 400 million bushels of wheat less than enough 
for the Allies and neutrals, and that Mr. Hoover had 
urged Americans to reduce consumption by one pound a 
week.2* Under the circumstances a diminished con- 
sumption in England became imperative. 

As earlier in the year, the Food Controller decided to 
try appeal before resorting to compulsion. Sir Arthur 
Yapp, who had done admirable work for the Y. M. C. A., 

32 Ibid., Sept. 12, p. 3. 

33 Ibid., Aug. 17, p. 8. 
3* Ibid., Sept. 12, p. 3. 



^ 



228 



WAR TIME CONTROL OF INDUSTRY 



was prevailed upon to become Director of Food Economy. 
At once he formulated a plan of campaign. In October 
an organization should be perfected and conferences held 
with various bodies whose help it was desired to enlist ; 
in November a " flood of oratory " was to be let loose 
over the country and members of Parliament would be 
asked to address their constituents; in December the 
kitchen would be invaded and the campaign brought im- 
mediately into the homes of the people. Throughout the 
three months, effort would be directed toward the estab- 
lishment of communal kitchens on a national scale, to- 
ward the collection of waste materials, toward a mobil- 
ization of the press.^^ The kitchens would have no 
charitable aspect, but would endeavour to prepare whole- 
some meals at moderate prices and to teach people the 
use of substitutes for bread and meat.^^ The Local Food 
Control Committees were urged to appoint each a Food 
Economy Committee of some twelve members representa- 
tive of all classes in the community.^^ Finally, a League 
of National Safety was to be desired. At first it might 
comprise only 10,000, but these first members should by 
house-to-house visiting bring the membership up to 100,- 
000 and eventually to 1,000,000.^^ 

The new ration which was to be urged upon the con- 
sumer was made public in November. The hard and 
fast lines of Lord Devonport's allowance were replaced, 

35 Ibid., Oct. 10, p. 8. 

36 Ibid,, Sept. 25, p. 5. 

37 Ibid., Oct. 15, p. 3- 

38 Ibid., Oct. 13, p. 3. 



FOOD 



229 



SO far as bread was concerned, by a sliding scale, and 
this was based upon the severity of the manual work 
done by the consumer. Men engaged in heavy industrial 
or agricultural work were allowed 8 lbs. of bread a week, 
men engaged in ordinary industrial or other work 7 lbs., 
men unoccupied or engaged in sedentary work 4 lbs. 8 
oz. ; corresponding groups of women were allowed 8 lbs., 
4 lbs., and 3 lbs. 8 oz. In the case of other foods which 
were rationed, there was no differentiation between 
adults, while no regulations were made touching children. 
Of cereals other than bread the weekly ration was 12 oz., 
of meat 2 lbs. (a reduction of Yz lb.), of sugar 8 oz. 
(unchanged), of butter, margarine, lard, oils, and fats 
10 oz. The inclusion of the last item was, like the slid- 
ing scale, an innovation, and was probably due to the 
shortage in fats which had arisen.^^ 

Behind these varied aspects of voluntary endeavour 
lay compulsory rationing. It was now much more a pos- 
sibility than it had been in the summer and Lord Rhondda 
declared that, if voluntary measures failed, he would have 
no hesitation in resorting to it. Already in October his 
department was working out a scientifically graded 
scheme. Taking into consideration the available sup- 
plies and the needs of all the Allies, the Ministry of Food 
was endeavouring to find out what food should be al- 
lotted to every man, woman, and child in the United King- 
dom, regard being had to age, occupation, and other con- 
siderations. Sometimes definite sacrifices might be nec- 

39 Ibid., Nov. 13, p. 6. 



230 



WAR TIME CONTROL OF INDUSTRY 



l» 



essary. At the moment, for example, there was great 
shortage of ham and bacon. Since miners found bacon 
essential, other people should refrain from eating it as 
long as the scarcity continued.^^ Such was the rationing 
scheme which impended in the autumn of 191 7- 
Whether it should be enforced would depend upon the 
success of the last energetic appeals to voluntary re- 
straint. 

While voluntary rationing thus ran its variable course, 
the Government continued to formulate less comprehen- 
sive regulations. The Public Meals Order of April pro- 
duced better immediate results than Lord Devonport had 
hoped for. Returns from eight large hotels for the week 
ending April 21 showed six of them using less than 2 
lbs. of flour per head weekly, one using 2>^ lbs. and the 
Savoy using 3.39 Ibs."*^ Since the allowance was 3>^ 
lbs. and the consumption of even all of it would have 
resulted in a saving of 53 per cent, over the consumption 
of the preceding November, the order was accomplishing 
much. Early in May the Government forbade the send- 
ing of cereal products in parcels to the soldiers at the 
front. The British soldier's ration, it explained, was the 
best in the world and there was no present intention of 
reducing it. Generous gifts of cakes, puddings, and 
biscuits sent by friends led to undesirable waste.^^ Ger- 
man prisoners, conversely, were not allowed to buy meat, 
flour, or sugar, in addition to their allowance or to re- 

40 Ibid., Oct. T3, p. 3. 

41 Ibid., May g, p. 3. 

42 Ibid., May 10. 



FOOD 



231 



ceive any article containing these ingredients.^^ At the 
same time the Food Controller prohibited except under 
licence the manufacture of starch from cereals. Sup- 
plies of starch would henceforth be conserved for collars, 
shirts being starchless, and the public were asked to dis- 
pense with starch in table cloths, napkins, and blouses.^^ 
In May the making of dog biscuits also was forbidden, 
while the feeding of grain to pheasants and other game 
had for four months been unlaw ful.^^ 

Cases concerned with the waste of food began to grace 
the annals of the police courts. At Chester, James Cottle, 
Limited, restaurant proprietors, were indicted for con- 
signing to the waste bin two pounds of bread. In de- 
fence it was urged that the bread consisted of scraps from 
customers' plates, which could not well be served again. 
But the sanitary inspector maintained that in the bin 
were crusts from the ends of loaves, and the magistrate 
imposed a fine of £5.^*^ Quite as severe was the judg- 
ment meted out to Louisa Heritage of Bromley. Al- 
though the Inspector had some weeks before spoken to 
her about bread and fat found in her dust bin, four pounds 
of bread in the shape of slices and crusts were again dis- 
covered there. Interviewed by the Inspector, she declared 
that she had intended to make a bread pudding of the 
fragments but had found them mildewed. '* I could not 
even give it to the poor ducks," she complained. When 

*3M. G., May i, 191 7. 

**L. T., May 11, 1917. 

*5M. G., May i, 1917; L. T., Jan. 12. 

*«M. G., May 24, 1917. 



232 



WAR TIME CONTROL OF INDUSTRY 



told that the matter would be reported, she retorted, 
" Pooh, it is not stolen. It is bread I have paid for and 
I can do as I please." The Bench, remarking that, while 
others were doing all they could to save bread, she was 
wilfully throwing it away, pronounced sentence of two 
months* imprisonment, or £5 fine."*^ In such ways did 
the new regulations come home to the recalcitrant, how- 
ever obscure they might be. 

The two aspects of food regulation thus far described 
looked toward the economizing of cereals, especially 
wheat. A third aspect had regard to the protection of 
the consumer by the establishment of maximum prices. 
Before November, 19 16, the Government, so far as food- 
stuffs were concerned, controlled only the price of sugar 
and influenced only the prices of foreign meat and for- 
eign wheat. Other imported products and all home 
products were left to the play of market influences. As 
Mr. Runciman pointed out in the Commons during his 
speech of November 15, maximum prices could be easily 
fixed for such imported foodstuffs as were controlled by 
the Government. If, however, the commodity was im- 
ported but not controlled, or if it were a home product, 
difficulties might arise. In the one case, maximum prices 
might drive the commodity from British shores; in the 
other, they might check its production. 

The Government, he went on to say, did not for the 
time being intend generally to fix maximum prices for 
foodstuffs not under its control. But there were some 



*7 L. T., May 15, 1917. 



FOOD 



233 



things relative to which it seemed possible to check rising 
prices yet not endanger the maintenance of the supply. 
To accomplish this, the method so often employed would 
be again tried; the cost of production would be ascer- 
tained and to it would be added a reasonable profit.*^ 
Commodities, which, he explained, seemed to invite such 
regulation at once were milk and potatoes. Orders 
were, accordingly, soon issued prescribing retail prices 
for both. Since these experiments preceded somewhat 
any similar action regarding bread, it may be permissible 
to digress briefly and explain the procedure. 

The case of potatoes was more abnormal than that of 
milk, since the demand of the army for potatoes was much 
greater and the potato crop of 19 16 had been very poor. 
In September, 19 16, Mr. Runciman explained that the 
Government had had to take possession of enormous 
quantities not only to feed the army but to distill spirits 
for the manufacture of explosives.^^ In November he 
added that it did not help the buying for the army to 
have it stated in the Commons that a profit of £62 per 
acre had been made on potatoes in Lincolnshire. At any 
rate the Government would soon put a stop to undue 
profits; and the problem was the more urgent since the 
shortage would most affect Ireland and the poor.^^ 

The first step toward meeting the situation was the 
order of November 20, requiring a return of stock from 
any person cultivating more than ten acres of potatoes 



48 P. D. C, 1916, LXXXVII, 859. 
*^ M. G., Sept. 29, 1916, p. 12. 
50 P. D. C, loc. cit., p. 854. 



234 



WAR TIME CONTROL OF INDUSTRY 



in Great Britain.''^ Next, as a measure of security, po- 
tatoes needed for seed, a very large percentage of the 
crop, were withdrawn from the consumer's market and 
provision was made for their distribution throughout 
such villages of the United Kingdom as might require 
them.^^ In the third place, the Government on January 
9, guaranteed minimum prices for the 19 17 crop. In 
view of the possibility of an unfavourable season, 115 s. 
per ton was set as a minimum price for potatoes delivered 
from September 15, 1917, to January 31, 1918, 120 s. for 
those delivered in February and March, 130 s. for those 
delivered during the rest of the season.^^ When Sep- 
tember, 19 1 7, came, a new order substituted a flat rate 
for this graduated scale. No grower might after the 
middle of the month sell potatoes, other than seed pota- 
toes, for less than 120 s. or for more than 130 s.^^ The 
fixing of liberal minimum prices had already proved its 
effectiveness. Farmers had put 100,000 additional acres 
under potatoes, allotment gardeners had responded, and 
the 191 7 crop was proving an abundant one.^^ 

On February i, 19 17, the Food Controller had also 
fixed the retailers' price for potatoes. This was set at 
ij^ d. the lb., although on the market 2 d. or even 23/2 d. 
was being charged. At i>^ d. the price per ton was £14, 
the very sum which retailers at the moment were paying 

51 B. T. J., Nov. 23, 1916, p. 571. 

52 Ibid., Dec. 21, pp. 861, 863. 

53 L. T., Jan. 20, 191 7. 
5* Ibid., Sept. 14, p. 8. 
55 Ibid., Oct. 9, p. 9. 



FOOD 



235 



for their stocks. Unless they could buy for £10 10 s. 
per ton they would be without profit; and at £10 10 s. 
wholesalers refused to sell, saying that transportation 
cost them from £3 to £4. The Food Controller had also 
fixed the price for which growers might sell, but not de- 
liver, to wholesalers at £8, and had declared that the 
difference between £8 and £14 was sufficient to cover 
transportation charges, the profits of wholesalers, and the 
profits of retailers. Let wholesalers and retailers divide 
the £6 between them. Adjust the matter the two dis- 
tributing trades would not and a potato famine impended. 
On February 19 the Government intervened. The 
grower was instructed to sell and deliver to the whole- 
saler potatoes at £9 per ton, the wholesaler to sell them 
to the retailer at £10 10 s. After March 31 these prices 
were to change to £10 and £11 10 s. respectively, and the 
consumer ultimately was to pay the advance by being 
charged i;^^ d. per Ib.^^ 

It took greengrocers some time to adapt themseWes to 
the potato orders and from February on charges and 
judgments against them in the courts were not infre- 
quent.*'^^ Farmers, too, got into trouble. At Spalding, 
G. H. Goose, farmer, paid two fines of £50 for selling po- 
tatoes above the maximum price,^^ and at the end of the 
season an extremely heavy penalty was inflicted. George 
Thompson, a Lincolnshire farmer, pleaded guilty to 55 
summonses. It appeared that he had sold 1320 tons of 

56 Ibid., Feb. 17, 19. 

57 Ibid., Mar. i, p. 9; Mar. 10, p. 3. 

58 M. G., May 16, 1917. 



• .^,i(.j!*M>»««»««»*l««>-W»<***'*"^ 



236 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



237 



potatoes at an average of £15 a ton, whereas he should 
have charged £11 10 s., dehvering them to the retailer. 
His excess profit since April i had thus been £4620 and 
another £500 had to be added for earlier transactions. 
Although the defence urged that Mr. Thompson was a 
pioneer in potato growing, a self-made man now seventy- 
four years old, a farmer of some of the finest land in 
Lincolnshire, that the order made no proper distinctions 
as to the quality of the produce, and that foreign potatoes 
brought £40 a ton, the court was firm. A fine of £5500 
was imposed and the heavy costs of £250 were added. ^^ 
It was a case to which members of the food administra- 
tion henceforth pointed with satisfaction when discussing 
the charge of profiteering. 

The Government had learned that it must intervene at 
every stage in the process of distribution. Accordingly 
the Potato Order of September, 191 7, after assuring the 
grower £6 a ton provided that from October i the profits 
of wholesale dealers, including overhead charges, must 
not exceed an average of 7 s. 6 d. a ton except on seed 
potatoes. From the same date, retailers might not sell 
at more than i d. a pound if their purchase was made at 
between 6 s. and 7 s. 6 d. per cwt, or at more than lyi d. 
if they had paid more than 7 s. 6 d. All dealers other 
than growers must henceforth be registered if they wished 
to sell.^^ Thus after a few^ months' experience in price- 
fixing the Government felt itself able to act with decision; 

«»L. T., Sept. 5, 191 7, p. 5. 
60 Ibid., Sept. 14, p. 8. 



and the abundant potato crop of 1917, together with the 
absence of complaint relative to the September order, 
seemed to indicate that an equitable scale of prices had 
been established. 

The fixing of the price of milk was prompted by more 
general motives than was the fixing of the price of po- 
tatoes. A scanty crop lay immediately behind the potato 
situation of the end of 19 16, but the slowly rising price 
of milk was induced by other causes than seasonal short- 
age. The Committee which reported in September on 
the high prices of meat, milk, and bacon pointed to the 
more urgent demand for milk and to the increased cost 
of production. Manufacturers of margarine, tinned 
milk, and milk chocolate had added their demands to 
those of the hospitals, while the high price of cheese re- 
acted upon the price of milk. Of the heightened costs 
of production, that of labour was not least, and from 
sheer lack of milkers many farmers were reducing their 
herds. 

Whereas the retail price for milk in London before the 
war had been 4 d. a quart, the Committee continued, it 
had by September, 19 16, risen to 5 d. in North and East 
London, to 6 d. in West London. What seemed pretty 
clear was that the increase had gone largely to the pri- 
mary producers, not in any considerable degree to the 
retailers. Even before the war the retailer's margin had 
been falling, and now dividends were steadily declining. 
The Express Dairy Company's dividend, for example, 
had fallen from 8 per cent, in 19 13 to 7 per cent, in 19 14 



238 



WAR TIME CONTROL OF INDUSTRY 



and to 5 per cent, in 1915. On the other hand, wholesale 
distributors had prospered, even allowing for high costs 
of distribution.^^ 

In Parliament the charge that associations of dairymen 
were making the profit and manipulating the price was 
reiterated. The Somerset and Wiltshire Farmers' As- 
sociation refused to sell its product in Bournemouth at 
a certain price, but encouraged its members to give the 
milk to the pigs. Although the Board of Trade had an- 
nounced that I s. 4 d. per gallon was a sufficient price for 
milk in London and large towns, the Cheshire Farmers' 
Association demanded is. 5 d., threatening if this were 
refused to convert its milk into cheese. The United 
Dairies Company (Limited), which supplies London with 
70 per cent, of its milk, was not in the habit of allowing 
any one of its customers, even should he wish, to sell at 
a price below that ruling in the district.^^ jy^^ producer, 
however, had his defenders. No dairyman, said Mr. 
Prothero, could make a profit of more than J4 d. a quart 
in producing milk at 4 d. Sir John Spear declared that 
both feeding stuffs and labour were 50 per cent, dearer 
than before the war, while milch cows for the dairy cost 
35 per cent, more.^^ 

In view of all these circumstances the determination 
of the price of milk became a somewhat hazardous un- 
dertaking. The order of November 21, 1916, imposed a 

«i Cd. 8358. 

«2 p. D. C, 1916, LXXXVT, 440, 457; M. G., Oct. 20, 1916, p. 4. 
«3 P. D. C, 1916, LXXXVII, 880, 933. 



FOOD 



239 



double limit. The price might not be greater than that 
paid on November 15, 19 16, and furthermore might not 
exceed by more than a specified amount the price in the 
corresponding month before the war. For retail milk 
this amount was 2 d. a quart to be added to a pre-war 
price of 4 d., for wholesale milk from 5>4 d. to 6>^ d. a 
gallon to be added to a pre-war 12 d. or 13 d.^* A month 
later the first limitation was removed, and the maximum 
price of wholesale " accommodation " milk was raised to 
IS. 8 d. per gal.^^ By March the Food Controller an- 
nounced that these maximum prices might in time create 
difficulties for farmers and might lessen production. To 
prevent the latter contingency the prices for the following 
winter would, he declared, be fixed early and would make 
the production of milk profitable in comparison with 
other farming activities.^^ A Committee appointed by 
the Food Controller in June recommended that the retail 
price of milk from June 15 to September 30 be 7 d. the 
quart, and a Committee of the Board of Agriculture 
urged the prompt fixing of prices for the winter of 
1917-18.^^ In July the Council of the British Dairy 
Farmers' Association sent to the Government its resolu- 
tion that the price of milk should from August i be raised 
for both producers and consumers, since at that time pro- 
duction would be reduced and farmers would be obliged 
to use high-priced feeding stuffs to maintain the supply. 

6* B. T. J., Nov. 23, 1916, p. 570. 

65 Ibid., Dec. 21, p. 861. 

66 Ibid., Mar. 29, 1917. 

67 L. T., Je. 27, 1917, P- 7. 



p^ mi\^ »-^*-^* i» 



240 



WAR TIME CONTROL OF INDUSTRY 



Both producers and distributors, the resolution con- 
tinued, carried on their business with no profit during the 
last two winters and in many cases with serious loss. 
From October i a further rise in price for the winter 
would be necessary to prevent abandonment of the milk 
trade by many engaged in it. The Government should 
make announcements at once to prevent dairy herds from 
being depleted.^^ 

Thus reminded of its promise, the Government early 
in September issued its scale of prices. For London and 
other large cities milk would be delivered by retailers at 
7 d. a quart during October, at 8 d. thereafter until the 
end of March; within the area of rural district councils 
in England and Wales and in districts other than burghs 
in Scotland, the corresponding prices would be 6 d. and 
7 d. Wholesale prices for the producer were to be 
IS. 5 d. a gallon during October, i s. jyi d. during 
November, is. 9 d. thereafter until the end of March. 
For any other person than the producer, the wholesale 
prices were i s. 8 d. or, for " accommodation " milk, i s. 
10 d. a gallon during October, afterward 2 s. or 2 s. 
2 d.^^ These prices, as had been promised, were liberal 
for the producer, and the only misgiving to which Lord 
Rhondda confessed regarding them was that milk would 
be costly for poor families. For children he hoped 
to make some arrangement by which it could be had 
more cheaply.'''^ As in the case of potatoes, govern- 

«8 Ibid., Jy. 14. 

*^ Ibid., Sept. TO, p. lo. 

70 Ibid., Oct. 10, p. 7. 



FOOD 



241 



mental price fixing had been generous to the producer, 
and any danger of shortage was apparently avoided. 

When Mr. Runciman on November 15, 19 16, told the 
House of Commons that the Government could probably 
check the increasing prices of certain commodities not 
under its control, he had immediate reference only to 
milk and potatoes. In the case of bread and home-grown 
wheat there was then no intention of fixing maximum 
prices.^i Against this resolve and against the dilatory 
action of the Government, the War Emergency Workers' 
National Committee soon protested. Pointing out that 
coal and milk were already high, it went on to demand 
that the Board of Trade commandeer all stocks of 
wheat, potatoes, and other necessary produce in the 
country at prices based upon the actual cost of produc- 
tion.^2 

The Government, however, adhering to its plan, fixed 
only the prices of milk and potatoes, the former in No- 
vember, 1916, the latter in February, 1917. Regarding 
grains it did nothing until April. Then on the i6th of 
that month the Food Controller yielded to the long con- 
tinued popular demand and announced that henceforth 
the maximum prices of grains harvested in 1916 would 
be 78 s. per quarter for wheat, 65 s. for barley, 55 s. for 
oats.^3 Since these prices were considerably below those 
ruling in the market, farmers, who for one reason or an- 
other had held back their wheat, suffered a loss of 8 s. or 

Ti P. D. C, 1916, LXXXVII, 860. 

72 M. G., Dec. 2, 1916, p. 8. 

73 B. T. J., Apr. 19, 1917- 



.-P-^fflW,™!'*"!!*!^ IWe^ Stc#*»^.fB*^ilf" V- 5Sfei,.-3SKfP--^ 



242 



WAR TIME CONTROL OF INDUSTRY 



10 s. a quarter.'^ In May several maximum retail prices 
were set. For all forms of maize flour only 3>< d. per 
lb. might be asked, for oatmeal 4>^ d. in Scotland, 5 d. 
elsewhere in the United Kingdom. The authorized 
prices for peas and beans were somewhat under what 
many retailers had paid for their stores. But grocers 
had for months reaped the harvest of a rising market 
and could afford to suffer some loss.*^^ At the end of 
June all orders of the Food Controller relative to prices 
were printed in lists which every grocer was asked to 
post. The commodities affected were barley, beans, 
cerealine (maize meal), chocolate, hominy, lentils, maize, 
milk, oatmeal, peas, potatoes, sugar, swedes, sweetmeats, 
wheat. Meat did not appear on the list, since, although 
certain restrictions had been placed on middlemen's 
profits, no retail prices had yet been fixed/^ 

In June, 191 7, Lord Rhondda, a very able business 
man, succeeded Lord Devonport as Food Controller. 
New authority was at once bestowed upon him and he 
acquired many of the powers which the Admiralty, the 
Army Council, and the Ministry of Munitions had long 
possessed. He might requisition the whole or a part of 
the output of any factory, paying therefor a price based 
on the cost of production plus a reasonable pre-war rate 
of profit. To determine this price he might examine the 
factory's books. To a merchant he might pay what the 

7*L T., Aug. 16, 1917, p. 3. 
"M. G., May 24, 31, 1917. 
7« Ibid., Je. 28, p. 2. 



FOOD 



243 



merchant paid, plus a pre-war rate of profit, although, if 
a middleman or speculator had acquired commodities 
otherwise than in the normal course of his business, the 
profit might be reduced or refused altogether."^^ 

Soon Lord Rhondda received the War Emergency 
Workers' National Committee and seemed favourably 
disposed toward its reiterated demands. These were 
now comprehensive. After commandeering all ships and 
controlling all transport facilities, the Government should 
purchase all essential imported foodstuffs ; it should con- 
trol all home-grown food products, such as wheat, meat, 
oats, barley, potatoes, and milk, determining prices for 
the consumer and apportioning food to families ; it should 
sell bread during the war and for six months after at a 
price not exceeding 6 d. per loaf, itself meeting any loss; 
it should create municipal and other local authorities to 
exercise food control and should appoint to them repre- 
sentatives of labour, of co-operative societies, and of 
women's industrial organizations."^^ 

On June 26, the new Food Director announced that he 
would control more stricdy the industries engaged in the 
production of foodstuffs. Later on he summarized his 
plans as follows : " My policy, broadly speaking, is to 
fix the price of those articles of prime necessity over the 
supply of which I can obtain effective control at all stages 
from the producer down to the retailer. Such prices 
will, as far as possible, be fixed on the principle of allow- 

''^Ibid., Je. 30, p. 4. 
78 Ibid., Je. 23, p. 7. 



, WrfaSS'SSIl****'/- '' 



244 



WAR TIME CONTROL OF INDUSTRY 



FOOD 



245 



ing a reasonable profit to those engaged in the production 
and distribution of the particular commodity. Indeed 
the policy will in effect be one of determining profits at 
every stage, though it will take the form of fixing prices. 
Every effort will be made to prevent speculation and un- 
necessary middlemen will be eliminated. Existing agen- 
cies — I make a strong point of this — will be utilized 
for purposes of distribution under licence and control and 
under the supervision of local food controllers appointed 
by the local authorities." '^^ 

In the execution of such a policy the first step was to 
determine the cost of production and handling. A cost- 
ings department was accordingly set up in the Ministry 
of Food and acquired full power to examine books and 
other sources of information. By August arrangements 
had been completed. Leading firms of accountants, 
twelve for England, three for Scotland, and three for 
Ireland, were invited by the Food Controller to act in an 
honorary capacity as supervising accountants for their 
districts. All were placed under the immediate super- 
vision of Mr. W. H. Peat, Financial Secretary of the 
Ministry of Food. Prices were worked out with refer- 
ence to costs and normal pre-war rates of profit.^^ It 
was the method by which the Army Contracts Depart- 
ment had been purchasing essential supplies, like woollens 
and boots, at prices below those ruling in the market. 

79 L. T., Sept. 12, 1917, p. 3. 

80 Ibid., Je. 27, p. 7; Aug. 15, p. 3. 



Soon this activity began to bear fruit. How maximum 
prices were fixed or revised for potatoes, for meat, and 
for milk has been described. It remains to consider the 
fortunes of wheat, flour, and bread. 

In the Commons on July 25, Mr. Clynes, the Assistant 
Food Commissioner, explained what would be done rela- 
tive to the price of bread. The measure, even in the days 
of novelties, was unusual. To quiet the complaint about 
the rising cost of this commodity, the price of the quartern 
loaf, about one shilling at the moment, would be reduced 
to 9 d. Since such a price was not compatible with the 
prevailing cost of wheat, the Government proposed itself 
to pay the difference between the cost and the selling 
price of bread. There should, in short, be a subsidized 
loaf. To effect this all flour from the mills, which were 
already under government control, would be sold to 
bakers at such a price as would enable them to put on 
the market a 9 d. loaf. The difference between the 
amount realized by millers from their sale of flour and 
the price which they would have to pay for British wheat 
or which the Government would have to pay for imported 
w^heat would be met by a subsidy from the Exchequer ^^ 
Mr. McKenna, taking up the subject, estimated this dif- 
ference at some £38 millions per year, if wheat remained 
at recent prices. The loaf at 9 d. represents wheat at 
60s. per quarter, whereas the maximum price paid to 
farmers at the time was 78 s. The difference, in short, 

81 Ibid., Jy. 26, p. 8. 



246 



WAR TIME CONTROL OF INDUSTRY 



would be the equivalent of the yield of a shilling income 
tax.^2 jj- ^35 ^ iQj^g g^gp jj^ socialistic policy. For the 
state assumed the responsibility of furnishing to all its 
people bread not merely at cost but below cost. The ef- 
fects, too, were to be far reaching. Apart from the new 
item which was added to the budget, the consumption of 
bread was bound eventually to increase, and consideration 
has already been given to new measures necessitated 
thereby. 

Because of the institution of the subsidized loaf the 
fixing of new maximum prices for home-grown cereals 
in August did not have the importance which similar ac- 
tion had had in April. So far as wheat was concerned, 
the prices indicated what the Government would have to 
pay the growers, not what the consumer would eventually 
pay. The new prices for wheat and rye ranged from 
y^i s- 6 d. per quarter in the autumn of 1917 to yj s. 9 d. 
in and after June, 1918.^^ Until June, therefore, the cost 
of subsidized bread to the Government would be some- 
what less than Mr. McKenna had computed, afterward 
quite as much, assuming always that imported wheat 
could be procured at about 78 s. Since the schedule of 
maximum prices has greater significance for the producer 
of cereals than for the consumer of bread, it will demand 
further consideration relative to its effects upon agricul- 
ture. 

Not the least among the innovations of the new Food 

82 Ibid., Jy. 25, p. 10. 
*3 Ibid., Aug. 16, p. 3. 



ji'Wj-^ SWtOftW 



FOOD 



247 



Controller was his enlistment of local support in the 
guise of Food Control Committees. The responsibility 
of these bodies for the distribution of sugar by means of 
the card register scheme has been described. At the end 
of August their appointment and constitution was pre- 
scribed, the order not being applicable to Ireland. Local 
authorities were asked to appoint to each committee not 
more than twelve persons. No restrictions upon choice 
were imposed save that one member must be a woman 
and one a representative of labour. As appointments 
throughout Great Britain began to be reported during 
September, it appeared that local bodies often chose as 
members representatives of the food-distributing trades. 
Protest often arose in such cases and there seemed to be 
danger that public confidence in the new Committees 
might not be so complete as was desirable. Lord 
Rhondda thereupon urged that appointments be repre- 
sentative of all classes of consumers and that, wherever a 
co-operative society existed, at least one representative of 
it be nominated. In one case where the local authority 
had chosen a preponderance of traders he asked for a re- 
vision of membership.^* Gradually more satisfactory re- 
ports began to come in and the Local Food Control Com- 
mittees seemed fairly launched upon their careers. No 
one could underestimate their importance. In their hands 
lay the immediate administration of all that had thus far 
been attempted in food control. To secure economies of 
consumption through subsidiary Food Economy Commit- 

8* Ibid., Aug. 27, p. 3; Aug. 28, p. 3; Sept. i, p. 8. 



r-^>*tii;*aBiti,..ii*KS»«.**™ '""'jM! ■ 



248 



WAR TIME CONTROL OF INDUSTRY 



tees was their task ; to administer the one rationing scheme 
already determined upon, that for sugar, was their duty; 
to supervise the observance of maximum prices and to 
determine these prices more precisely in certain com- 
modities was their responsibility. Local self-government 
by representatives of the community was an old English 
tradition, and Lord Rhondda showed insight in making 

it one of the decisive factors in his difficult undertak- 
ing. 



1 



AGRICULTURE 

The problem of the food supply, as considered in the 
preceding chapter, has reference either to economy of 
consumption or to the protection of the consumer against 
high prices. The latter aspect of it has in turn revealed 
another phase of the situation. That prices may be kept 
moderate, the maintenance and even the increase of pro- 
duction appears to be indispensable. Early in the war 
the Government saw this clearly and on June 17, 1915, 
appointed a committee to report on the subject. The 
committee was instructed to suggest steps which, on the 
assumption that the war would be prolonged beyond the 
harvest of 19 16, might be taken to maintain and increase 
by legislation or otherwise the production of food in 
England and Wales.^ Lord Milner became chairman of 
the Committee and its two reports made in July and 
October of 191 5 admirably describe the condition of 
agriculture and outline measures looking towards its im- 
provement.2 They are fundamental for an understand- 
ing of what was finally done. 

Since the fall in the prices of cereals in the later seven- 
ties, the Committee pointed out, some four million acres 
of arable land in England and Wales have been converted 
to pasture. It might have added, as Mr. Lloyd George 



1 B. T. J., Je. 24, 1915. 
2 Cd. 8048, 8095. 



249 



,iifW*-'Wlr-te» •^'*' I '■?«.' 



250 



WAR TIME CONTROL OF INDUSTRY 



did later that twenty years after the Corn Laws were 
abolished in 1846, twice as much wheat was still produced 
as was imported. Today, on the other hand, from 70 
to 80 per cent, of the cereal supply is got from abroad 
and the area under wheat has fallen to less than two mil- 
lion acres. Of the 27,000,000 acres of agricultural land 
in England and Wales, 16,000,000 acres are in pasture, 
only 11,000,000 acres in tillage.^ In view of this 
situation, the Committee recommended that farmers 
be induced to plough up much of the land laid to grass 
since the seventies. Thereby not only would the grain- 
producing capacity of the nation be increased but its 
capacity to produce meat and milk would in some districts 
be almost doubled. Each additional million acres under 
wheat would mean from four to five million quarters 
grown at home or fully six weeks' supply for the entire 
United Kingdom.^ 

If farmers were to embark upon such an undertaking, 
they would need persuasion. To induce them to sacrifice 
the comparative security of their present profits, to 
change methods and alter rotations, to increase their 
arable in the face of a shortage of labour, to run the risk 
of uncertain seasons and a fall in the price of wheat at 
the end of the war, the state should guarantee a minimum 

3L. T., Je. 28, 1917, p. 10. Of the 11 million acres in tillage in 
1916, about 2 millions were in wheat, i^ millions in barley, 2 mil- 
lions in oats, i million in turnips, i million in peas, beans, potatoes, 
and mangold, while the remainder was in clover and other rotation 
grasses. 

* Cd. 8045. 



AGRICULTURE 



251 



price for home-grown wheat for a period of years. The 
Committee was unanimous in its recommendation that 
45 s. a quarter ought to be assured to growers for four 
years. 

There was danger, of course, that not much wheat 
might be got, while the Government might yet find itself 
pledged to heavy payments after the war. It had, there- 
fore, been suggested to the Committee that the price be 
guaranteed only on increased output. Such a measure the 
Committee feared would not work in practice and thought 
more feasible another proposal to limit the Government's 
liability. This second plan would restrict the state's 
guarantee to those farmers who might increase their 
arable by at least one-fifth over the 19 13 area and to those 
who had at least one-fifth of all their arable and grass 
land under wheat. Some members of the Committee 
were of the opinion further that no farmer should have 
the benefit of a guaranteed price unless he could show 
that he was paying a fair rate of wages to his labourers. 
The Committee as a whole, however, feared that such a 
proviso might defeat the main purpose of the measure 
and was not convinced that it was as yet necessary to 
apply compulsion to insure a rise of wages. Wages 
ought to rise automatically as a result of the scheme and 
of the demand for labour. Meanwhile an inquiry into 
the agricultural wages paid throughout the country might 
well be instituted to serve as a basis for legislation, if 
legislation should prove necessary.^ 

5 Ibid. 



i>,«»*l>««W>JW8b<i!*B*»a*?S 



252 



WAR TIME CONTROL OF INDUSTRY 



Shortly after the Committee made its report the food 
situation so changed that the Government did not feel 
called upon to adopt the new proposals. The submarine 
seemed to be under control, immediate shortage of the 
food supply was averted, cattle and sheep were abun- 
dant, the area under wheat had, owing to high prices, in- 
creased by one-half a million acres, and large crops were 
reported from Canada and Australia. The dearth of la- 
bour and the need of finding men for the army also re- 
strained the Government's hand.® 

The recommendations of the Committee's second re- 
port in October, accordingly, looked to increasing pro- 
duction without the stimulus which would have been de- 
rived from a minimum price for wheat. Arable farm- 
ing, the Committee was informed, had been remunera- 
tive on all but the wettest and heaviest soils for some 
years before the war. More profitable it would become 
by the adoption of new machinery and methods, and to 
such adoption the state might, under the circumstances, 
well contribute. Of fertilizers, England produces large 
quantities of sulphate of ammonia, much of it exported. 
The Government should arrange with producers to fur- 
nish a sufficient home supply of it at nearly pre-war 
prices and should impress upon farmers its value. Meas- 
ures should be taken to have other fertilizers, nitrate of 
soda and phosphate rock, imported from Chile, and from 
Florida and Tennessee. New feeding stuffs, made from 
palm nuts, cocoanuts, and earth nuts, should be recom- 

6 A. R., 1915, pp. 152, 153. 



I 



AGRICULTURE 



253 



mended and the manufacture of oil-cake should be ex- 
tended. Inasmuch as agricultural tractors and ploughs 
were essential in view of the shortage of labour, the Gov- 
ernment might well permit manufacturers to retain their 
mechanics and might well declare the making of such 
implements on a par with Government contracts. The 
labour of women should be organized and directed to the 
farms. Economical and valuable was the raising of pigs, 
since they eat food otherwise largely wasted and pro- 
vide the meat most widely consumed by the working 
classes. Plots of unused land near towns and villages 
should be utilized. Most immediately effective, perhaps, 
of all the Committee's recommendations was its proposing 
the appointment of local War Agricultural Committees.'^ 
Such bodies w^ere soon instituted to urge upon the far- 
mer the adoption of the improvements in question, and 
a year later Mr. Prothero complimented them on their 
admirable work. 

A year later, as it happened, the agricultural situation 
had become much more serious than it was when Lord 
Milner's Committee made its second report. In May, 
1 9 16, Mr. Prothero declared in the Commons that the 
production of food in the country was likely to fall off 
by 15 per cent, or 25 per cent. " I should be very glad," 
he added, " if the Government would grasp this situation 
firmly and put us upon rations. I believe that sooner or 
later that will have to be done." One cause of the im- 
paired prospect was the bad weather of the spring of 

7 Cd. 8095. 



\ 



254 



WAR TIME CONTROL OF INDUSTRY 



191 6, which long made labour on the land impossible.^ 
By autumn further causes were apparent and were dis- 
closed in the debate of October 17. The area under 
wheat was 260,000 acres smaller than in 19 15 and the 
wheat crop stood at only 88>^ per cent, of the average 
crop of the last ten years. In part this was due to a 
diminished yield per acre, since the land of England and 
Wales was tending to become increasingly foul. In the 
autumn of 1916, 112,000 acres, which a year before had 
been under farm crops, were lying fallow. It was pre- 
dicted, too, that in 19 17 500,000 more acres would cease 
to be under wheat. Should this happen, the loss for the 
two years would be some two million quarters, an 
amount which 100 ships of 5000 tons would require four 
and one-half months to fetch from Australia. And be- 
hind all this was the fact that 30 per cent, of the perma- 
nent agricultural labour had left the land.® By way of 
contrast the Marquis of Lincolnshire pointed out in the 
Lords that, with worse land and worse weather, the 
German farmer was able to produce 50 per cent, more 
meat and corn per acre than the British farmer.^^ 

The seriousness of the situation impelled the Govern- 
ment to action and from November, 191 6, various meas- 
ures, for the most part recommended by Lord Milner's 
Committee, were put into effect. Behind them was the 
vigorous hand of Mr. Prothero, the new Minister of Agri- 

8 p. D. C, 1916, LXXXII, 1895. 
Mbid., LXXXVI, 451,454, 458. 
10 L. T., Aug. 7, 1917, p. 8. 



AGRICULTURE 



255 



culture, a former member of the Committee, and the 
author of a history of British farming. The Govern- 
ment's first act was to order an agricultural census of 
Great Britain. Crops, live stock, the residents on the 
farm, casual labourers, male employes who had joined the 
army, all were to be reported. ^^ Next an ideal was pro- 
posed. If in 1872 England and Wales had tilled some 
4,000,000 acres more of arable than at present, why 
should they not so till some of them again? Plans look- 
ing toward such an achievement were formulated. Cer- 
tain measures could be taken before spring to induce the 
farmer to plough liberally in 19 17 and during the year 
other measures to foster still more ploughing during 
19 1 8. In the main, four lines of action were proposed. 
Waste lands might be brought under tillage, fertilizers 
and improved agricultural machinery might be made 
available for the farmer, the number of farm labourers 
might be increased and paid a suitable wage, and a mini- 
mum price for \/heat over a period of years might be 
guaranteed. 

To the first of these measures the Government was 
urged by the War Emergency Workers' National Com- 
mittee. In November, 19 16, the Committee proposed 
that the Government take into its own hands 400,000 
acres now fallow or in grass and provide for the tillage 
of them. Capital, it added, should be advanced to local 
authorities and to co-operative societies to induce them 

" D. R. M., 3rd ed., p. 357. 



256 



WAR TIME CONTROL OF INDUSTRY 



AGRICULTURE 



257 



to bring land under cultivation.^^ j^ ^^^ ^pj^.^^ ^^ ^^j^ 
appeal the Government responded on December 5 by 
a new regulation under the Defence of the Realm Act. 
This provided that the Board of Agriculture and Fish- 
eries might enter upon land without any one's consent if 
the land was for the time unoccupied or was common 
land; and that in other cases it might so enter with the 
consent of the occupier and the person receiving the rent. 
Land thus taken over might be cultivated either by a 
contract of tenancy or in some other manner and the 
Board might authorize any local authority to act for it. 
This meant, of course, that local authorities might ac- 
quire uncultivated land and let it out in small allotments 
and market gardens. If a farmer should prove recalci- 
trant about the cultivation of his land, the Agricultural 
War Committees might enter upon it and take possession. 
The regulation was an endeavour to stimulate produc- 
tion through small holdings. ^^ 

In taking the next step, the provision of fertilizers, the 
Board of Agriculture did what Lord Milner's committee 
had recommended : it checked the exportation of sulphate 
of ammonia. Inasmuch as the supply of feeding stuffs 
like oil-cake was bound to be reduced, farmyard manure 
would lose half of its ammonia. In 1918 there ought, 
therefore, to be sold five times as much sulphate of am- 
monia as was used in 19 16 and of this the Board had 
hope. Supplies of lime also were increased and a native 

12 M. G.. Dec. 2, 1916, p. 8. 

13 B. T. J., Dec. 14, 1916, p. 795. 



i 



form of phosphate which might replace the German 
product was introduced to the market.^* 

With even more comprehensive plans the Board of 
Agriculture turned to the provision of improved agricul- 
tural machinery. To co-operate with it and with the 
Food Controller, the Ministry of Munitions in January 
set up an Agricultural Machinery Branch. Agricultural 
machinery and implements were henceforth to be classed 
as munitions work and, in order to control the character 
of those manufactured, no one might henceforth make 
them except under permit.^^ For the same reason the 
importation of them without licence was prohibited, the 
Government wishing to ensure that the machinery be of 
the right type and be distributed over the country where 
most needed. ^^ By February, thirty-two motor tractors 
had been acquired by the Board of Agriculture and 230 
more had been ordered.^^ Mr. Lloyd George, speaking 
in May, warned workmen that disaster might be brought 
upon the country by any refusal on their part to use these 
labour-saving machines. ^^ At the same time the Board 
of Agriculture requested the Ministry of Munitions to 
supply it with 6000 tractors. A type was selected and 
engineering firms were asked to tender bids for the mak- 
ing of the whole or of parts. So great were the de- 
mands upon the Ministry of Munitions for war material, 

1* L. T., Oct. 6, 1917, p. 8. 

16 D. R. M., 3rd ed., p. 179; L. T., Jan. 10, 1917, P- 5- 

16 B. T. J., Mar. i, 1917, p. 606. 

17 L. T., Feb. 9, 1917. 

18 M. G., May 28, 1917, p. 6. 



ii^-M. i■s^^'^^ ^^ i^nwV'S^'? 



258 WAR TIME CONTROL OF INDUSTRY 

however, that the undertaking had to be adandoned. A 
considerable number of American tractors of approved 
type were purchased instead, and the entire output of 
British-built tractors was absorbed. ^^ 

If 2,000,000 acres were to be added in 191 8 to the ex- 
isting arable it was estimated that at least 5000 tractors 
would be needed. In August, 191 7, as many as 9000 
had been ordered and 1000 of them had been received 
from the manufacturers. It was hoped that by October 
2500 would be on hand, by the end of December 4500, 
and by the end of March the entire 9000. Of the num- 
ber, 6000 had been ordered from the Ford Company, 
2000 from other American firms, and 1000 from British 
manufacturers. The Royal Agricultural Society had 
recommended the Ford after a trial by five judges. It 
was light for its power, hence was light on the land, was 
easily handled, and was able to turn in a small circle. 
Since the Fords could not be made in England as had been 
at first planned, the parts were to be made in the United 
States and assembled after being sent over.^^ In its 
furnishing of tractors the Government did not intend to 
relieve farmers of ploughing and of other work which 
they could do themselves. Farmers who could were 
urged to buy tractors; but to those who could not, the 
War Agricultural Committees, would, as far as possible, 
furnish assistance.^^ The loan of expensive agricultural 
machinery w^as thus a new burden assumed by the state. 

i»B. T. J., Je. I, T917, P- 203; L. T., Jy. 25, 1917, p. 8. 

20 L. T., Aug. 24, 1917, p. 3. 

21 Ibid., Aug. 2, p. 3. 



AGRICULTURE 



259 



The extended use of agricultural machinery was ex- 
pected to repair in part the 30 per cent, depletion of agri- 
cultural labour. Efforts were also made to retain such 
labourers as remained and to increase the number of 
hands from other sources. Among possible sources of 
supply were German prisoners. In November, 19 16, 
Parliament was informed that a scheme was in prepara- 
tion whereby small parties of prisoners would be turned 
over to farmers, who in turn would be responsible for 
their custody, housing, and feeding. At the beginning 
of the new year Mr. Prothero announced that 10,000 
prisoners skilled in agricultural labour would be available 
and would be employed under the supervision of the 
county War Agricultural Committees.^^ Owing to the 
attitude of the prisoners themselves, however, not very 
much came of the project. 

Women were another resource. In June, 191 7, the 
President of the Board of Agriculture issued an appeal 
to farmers to employ them more extensively on the land. 
They were to be looked upon not as substitutes for men 
already employed but as additional workers, and no 
farmer would risk the loss of his male labour if he 
utilized their services. They were willing and able to 
work ; and they had already shown themselves useful in 
the care of stock, in milking, in the management of 
horses, in all odd jobs about the farm and in such ordi- 
nary field work as weeding and hoeing. Early in the 
year Mr. Prothero had expressed himself as hopeful of 

22 A. R., 1916, p. 189; L. T., Jan. 2, 1917- 



26o 



WAR TIME CONTROL OF INDUSTRY 



securing the services of 50,000 or 60,000 women, the 
equivalent of 35,000 men.^^ In June Lord Milner 
told the Lords that 120,000 women were working 
on farms and that some 20,000 more might soon do 



so. 



24 



More difficult was the retention of male labour on the 
farm. Better wages could be had elsewhere, and the 
War Office was only too ready to enlist agricultural la- 
bourers. How unwise were some of the dispositions of 
this body is illustrated by an instance described in Parlia- 
ment. A noble peer explained that his second gardener, 
a man not unskilled in agriculture, had been enlisted and 
that the man's wife and eight children had become re- 
cipients of an allowance amounting to 35 s. weekly. 
Meanwhile the gardener had for two years been em- 
ployed, not at the front, but as an officer's groom some- 
where in Essex.^^ Further evidence of lack of co-ordi- 
nation between the departments of War and Agriculture 
was abundant. When the latter told farmers to pool 
their labour, the former asked, '' How can this man be 
indispensable to Farmer A when he has been lent to 
Farmer B ? " On the other hand, the County Councils, 
those large landlords of small holdings, were not able 
to co-ordinate labour. If 100 acres in small holdings 
were cultivated by ten men, each could say to the War 
Office that he was indispensable to the cultivation of 

23 M. G., Je. 1917, p. 4; L. T., Feb. 9. 

2*L. T., Je. 28, 1917, p. 10. 

25 P. D. C, 1916, LXXXVI, 460. 



AGRICULTURE 



261 



his holding, yet the County Council could till the 100 
acres with three men and release seven.^^ 

In 19 1 7 some approach was made to better co-ordina- 
tion. An agreement was reached between the two de- 
partments whereby the new army order should withdraw 
not more than 30,000 men from the land. In May, to be 
sure, there was complaint that the War Office was not 
keeping its agreement,^^ but in the same month it did at 
least assist agriculture in another way. Soldiers not in 
Class A were given furloughs to assist in sheep-shearing. 
Elsewhere training schools were set up to teach soldiers 
the management of horses and the technique of plough- 
ing.28 In June Lord Milner stated that from one source 
or another the Government had secured some 70,000 men 
for farm work.^^ In July it was announced that the 
County Agricultural Executive Committees would be 
given some influence in retaining men on the land. If 
any Committee should issue a voucher that a man was 
employed full time in farm work and was so engaged on 
June I, 19 1 7, and further that the work was of national 
importance, the man would not be called up for the army. 
The Committees were to see to it, moreover, that agri- 
cultural labour was put to the best use and that any sur- 
plus on a farm would be moved to some other place where 
it was urgently required.^^ Such measures tended to 

2« P. D. C, 1916, LXXXVII, 878. 

27 M. G., May 30, Je. 7, I9i7- 

28 L. T., Oct. 6, 1917, p. 8. 

29 Ibid., Je. 28, p. 10. 

30 Ibid., Jy. 25, p. 3. 



262 



WAR TIME CONTROL OF INDUSTRY 



allay the farmer's distrust of the War Office and to re- 
lieve somewhat his anxiety regarding labour. 

The policy of largest scope, however, looking toward 
the encouragement of agriculture, was the guaranteeing 
to the farmer of minimum prices for grain and to the 
agricultural labourer of a minimum wage. Minimum 
prices for grain had, it will be remembered, been recom- 
mended by Lord Milner's Commitee, and the decision of 
the Government at length to adopt this recommendation 
was announced by Mr. Lloyd George in the Commons on 
February 23, 1917. A schedule of prices for six years 
was presented, a proviso being added that the matter was 
open to reconsideration after four years. As compared 
with the pre-war price of wheat, which was 34 s. 11 d. the 
quarter, and the prices of 191 5 and 19 16, which were 
respectively 52 s. 10 d. and 58 s. 5 d., the new minimum 
prices for wheat, it was proposed, should be 60 s. in 19 17, 
55 s. in 1918 and 1919, 45 s. in 1920, 1921, and 1922. 
The corresponding prices for oats during the six years 
were to be 38^^ s., 2i^ s. and 24 s. For potatoes in 19 17, 
£6 a ton should be guaranteed. After explaining that 
some four million acres had been converted from arable 
to grass since the sixties, the Premier stated that the 
farmer was hesitant, not so much through lack of labour, 
as through timidity. Twice since the process of conver- 
sion began he had been caught badly with too much 
arable — in 1880 and in 1890. That a fear of the re- 
currence of such disaster might not affect him now, the 
Government was drafting a bill along the lines indicated. 



AGRICULTURE 



263 



Provision for a minimum wage of 25 s. a week for agri- 
cultural labourers would be included.^^ It was hoped 
that as a result some three million more acres might be 
brought under cereals and potatoes.^^ 

On April 1 1 the new measure, known as the Com Pro- 
duction Bill, was introduced.33 At once the question 
which had confronted Lord Milner's Committee again 
arose. Should the guarantee extend to all grain raised, 
or merely to the added product? If to the former, the 
Government might find itself bound to make consider- 
able payments, although output might thereby be little in- 
creased. If to the latter, the farmer might not main- 
tain existing production. Mr. Prothero declared that the 
second risk was more serious and that the Government 
was not willing to confine the bonus merely to excess pro- 
duction. Another question which came up for discussion 
was whether the output in quarters or the acreage under 
cereals should be made the basis of the guaranteed pay- 
ments. To give the measure a wider and more demo- 
cratic appeal the acreage basis was adopted. As 
amended, the bill provides that payments, whenever 
called for, will be based upon every acre cultivated and 
producing a crop of wheat or of oats.^^ 

Most hotly debated of the provisions of the bill was 
that relative to the minimum wage for agricultural la- 
bourers — an inducement to keep them on the land and 

31 Ibid., Feb. 24, p. 9. 

32 M. G., Je. 7, 1917. 

33 L. T., Apr. 12, 1917, p. 3. 
8* Ibid., Jy. II, p. 10; Jy. 12. 



264 



WAR TIME CONTROL OF INDUSTRY 



a means of enabling them to meet the increased cost of 
Hving. The Premier in February had promised 25 s. a 
week. Before the war he had started a campaign to 
secure 20 s., the average pre-war wage being 17 s. 10 d. 
RecalHng the latter facts and pointing out that the figures 
of the Board of Trade showed an advance of 75 per cent, 
in the cost of living, the Labour members demanded that 
the minimum be fixed at 30 s. The Government, how- 
ever, stood firm. It maintained that the 25 s. minimum 
would mean in many districts an acceptable advance over 
prevailing rates, that this sum could be increased where 
desirable by Wages Boards for which the bill provided, 
that the 25 s. would continue after the war and was in- 
dependent of a fall of prices, and that, should a fall to 
pre-war levels take place in the price of wheat during 
five years, the farmer would get from the state only £68 
millions but would have to pay in wages £59 millions 
above pre-war wages. Should the minimum wage be 
fixed at 30 s. the latter payment would be increased to 
£100 millions. Such a provision would take from the 
bill its effective force as a stimulus to production and 
upon the Premier's February promise the Government 
would stand or fall. It would gladly fix no minimum 
whatever, as in the case of the miners, but agricultural 
labour was unorganized and helpless.^^ 

Thus defended, the Bill was passed on August 21 and 
five weeks later an Agricultural Wages Board was set 
up. Upon it sat sixteen representatives of employers 



»5 Ibid., Jy. 24, p. 10. 



AGRICULTURE 



265 



and sixteen representatives of workmen, together with 
seven impartial appointees of the Board of Agriculture. 
Similarly constituted local wages committees might be 
established by the Central Board, their chief duty being 
to recommend wages applicable in their districts.^^ In 
determining minimum wages the Board was instructed 
by the President of the Board of Agriculture to have in 
mind an amount which would enable a man to keep him- 
self efficient and maintain his family *' in accordance 
with such standard of comfort as may be reasonable in 
relation to the nature of his occupation." ^'^ It was a 
statement that would many times have to be interpreted. 
While the Government was carrying out its policy of 
encouraging agriculture by guaranteeing minimum wages 
for an indefinite time and minimum prices of grain for a 
period of years, it displeased the farmer by its action in a 
closely related matter. In August, 19 17, the scale of 
maximum prices for grain, set up in the spring to pro- 
tect the consumer, was revised. So far as wheat was 
concerned, the new scale would no longer affect the con- 
sumer. Since bread was henceforth to be supplied at 
the uniform price of 9 d. the quartern loaf, a price cor- 
responding with one of 60 s. the quarter for wheat, the 
maximum price to be set for wheat reflected only what 
the Government would in the future have to pay as its 
subsidy for bread so far as this was made from home- 
grown wheat.^^ To the farmer the new scale seemed 

36 Ibid., Sept. 29, p. 7; Sept. IS, p. 3- 

37 Ibid., Aug. 7, p. 8. 
88 Cf . above. 



266 



WAR TIME CONTROL OF INDUSTRY 



illiberal. Not only were the spring maximum prices re- 
duced, but the weight of the quarter was increased. In- 
stead of the spring maximum of 78 s. a quarter for 
wheat, the nominal maximum until December i now be- 
came ']'}) s- 6d. and the real maximum (allowing for the 
increased size of the quarter) 72 s. The maximum for 
oats was correspondingly reduced from 55 s. nominally 
to 44 s. 3d., actually to 43 s., the maximum for barley 
from 65 s. nominally to (^2 s. 9 d., actually to 56 s. 

Provision was made, to be sure, for a progressive in- 
crease in prices during the next six months, except in the 
case of barley. On and after June i wheat would at 
length command yj s. 9 d. and oats 48 s. The price of 
wheat in the summer of 19 18, therefore, was to be prac- 
tically what it had been in the summer of 191 7. But 
farmers grumbled about the reduction during the later 
months of 1917 and the earlier months of 1918. When 
the crops of 191 7 were sown, they said, no intimation had 
been given that market prices would not prevail ; there 
was being transferred to the consumer most of the ad- 
vantages arising from their redoubled efforts ; the success 
of the Corn Production Bill was being compromised by 
a loss of confidence in the Government.^^ More astute 
observers saw in the new prices an endeavour to make 
them reflect the seasonal abundance of autumn and winter 
compared with the scantier supplies of spring and early 
summer. Looked at impartially, they were high in com- 
parison with pre-war prices and even in comparison with 

3»L. T., Aug. 16, 1917, p. 3; Aug. 20, p. 3. 



AGRICULTURE 267 

the minimum prices of the Corn Production Bill. Com- 
plaint, however, was not likely to be long continued nor 
was the success of the new measure likely to be seri- 
ously imperilled. 

By the autumn of 1917 the Government could review 
the agricultural achievements of the year and state ac- 
curately its program for 1918. Whereas at the end of 
1916 the arable under cultivation in England and Wales 
was 260,000 acres less than in 191 5, the spring sowing 
of 1917 had restored the situation and had improved it 
by the addition of 380,000 acres. To these 640,000 acres 
should be added a considerable acreage in Scotland and 
700,000 acres in Ireland.^^ In view of the unexpected 
increase in Ireland, the Government could afford to re- 
duce its program for England and Wales. The 3,000,- 
000 acres at first asked for in 19 18 were changed to 
2,600,000, of which some 380,000 had already been 
ploughed.^ ^ Not all of the remaining amount need be 
got, Mr. Prothero pointed out, by ploughing up pastures. 
A part could come from bare fallow, of which there was 
still 350,000 acres, a part from the 2,500,000 acres under 
clover and rotation grasses, a part by taking two crops 
in succession, if the land could be kept clean. Not more 
than 2,000,000 acres of grass land would have to be 
ploughed. To effect the ploughing of this amount fa- 
cilities in the shape of tractors had been provided or 
would be ; government credit for the purchase of seeds, 

<o Ibid., Oct. 12, p. 4. 

-»! Ibid., Aug. 6, p. 3 ; Aug. 24, p. 3. 



268 



WAR TIME CONTROL OF INDUSTRY 



fertilizers, implements, and horses would be extended; 
horses and ploughmen would be lent to farmers on rea- 
sonable terms, the services of women and soldiers would 
be made available.^^ Behind these immediate methods of 
assistance were the guarantees of the Corn Production 
Bill. The outcome would for the rest depend upon the 
patriotism and skill of the British farmer. 

*2 Ibid., Oct. 6, p. 8. 



CONCLUSIONS AND COMPARISONS 

Broadly speaking the state may be said to exert influ- 
ence upon production, distribution, and consumption in 
three ways. It may persuade the producer, distributor, 
or consumer to enter voluntarily upon some course of 
action contributory to the public advantage. So per- 
suaded the producer may put his product on the market 
at a price which will yield him only a moderate return. 
The consumer, whether the state itself or the public, will 
have the benefit of the renunciation of profits which con- 
ditions of scarcity might put within reach. The dis- 
tributor in the same way may be induced to renounce the 
excess charges which conditions of transportation and 
distribution might warrant his asking. The consumer, 
again, may be urged to economize in the use of such neces- 
sities as coal and food. Any nation which in time of war 
or in time of peace can bring itself to a state of efficiency 
by measures like these may boast of a population ani- 
mated by a high degree of public spirit. So far as such 
methods are efficacious they are obviously wisest and are 
most creditable to the Government and people concerned. 
Wherever possible, they should have first trial. 

The state, however, failing in its appeal to voluntary ef- 
fort, may find it necessary to resort to sterner measures 

269 



,!,-ifes„J "U— 



270 



WAR TIME CONTROL OF INDUSTRY 



CONCLUSIONS AND COMPARISONS 



271 



than persuasion. It may have to impose regulations upon 
the processes of production, distribution, and consump- 
tion. Inasmuch as such restraints are sometimes neces- 
sary in time of peace, their imposition in time of war 
would not be unexpected or unwarranted. They tend 
usually to assume the form of making obligatory such 
action as would preferably be induced by persuasion. The 
producer is required to put his product on the market at 
a fixed maximum price, regardless of his concurrence; 
the distributor is restricted in what he may charge for 
his services; the consumer, although not rationed, finds 
that food is procurable only in certain quantities depend- 
ant upon the quota allowed to his district or firm. Regu- 
lations like these indicate that the state cannot rely upon 
voluntary renunciation but hopes that, by the least pos- 
sible interference on its part, satisfactory conditions may 
be made to prevail. 

In certain cases the state may find that even such meas- 
ures are inadequate. At this juncture it steps in and as- 
sumes entire control. While the immediate administra- 
tion of the industry in question may be left with the own- 
ers, the Government henceforth determines all larger is- 
sues. It fixes the wages to be paid the workers, it ar- 
rives at a cost price by an investigation of the costs of the 
successive stages of production, it adds to this the profit 
which is deemed just for the producer, and it specifies 
how the commodity in question may be put upon the mar- 
ket. Wholesalers' and retailers' transactions are super- 
vised and their charges closely restricted. In this way 



the commodity is procurable by the consumer at what he 
may properly consider the cost price. The consumer, 
although the ultimate beneficiary of a system like this, 
does not escape its compelling power. Economy of con- 
sumption may be enjoined upon him and a system of ra- 
tioning, more or less elaborate, may be imposed. Such 
imposition occurs only when the supply of a commodity 
is considerably below the normal demand. Then it is 
that the state interposes to see that equal sacrifices are ex- 
acted from all its citizens. 

Naturally a country is likely to experience transitions 
from one of these stages of state interference to another 
as the conditions of war grow more exacting. The tran- 
sitions, too, are more rapid in the case of certain indus- 
tries than in the case of others. In general a Govern- 
ment, plunged into war, at once assumes control of what- 
ever industries it feels essential to the prosecution of the 
war or the maintenance of its civil population in war 
time. Other industries it leaves free, relying if need be 
upon persuasion and exhortation. Only when induce- 
ments of this kind are disregarded does it resort to regu- 
lation and ultimately to control. A comparison of Eng- 
lish and American experience in these matters is not un- 
instructive. 

Striking differences in the situation in which each 
nation finds itself at the end of 19 17 at once appear. 
One country has been at war for more than three years, 
the other for less than three-fourths of a year. In the 
one case a vast expenditure of resources, a large part of 



(■*!;"j,„*«ri«', .^'."mi^ifn^''^ 



'1 



2^2 



WAR TIME CONTROL OF INDUSTRY 



CONCLUSIONS AND COMPARISONS 



273 



the population under arms, heavy casualties, and the long 
strain of steady application demanded of the labouring 
classes have created a temper very different from that 
prevailing in a country which until recently has profited 
from the war and has as yet felt scarcely any of the sac- 
rifices which it entails. In the second place, geograph- 
ical conditions and the resulting industrial specialization 
have placed the two countries in a different attitude to- 
ward certain of the necessaries of life. Great Britain 
depends upon foreign countries for a large part of her 
foodstuffs and for such commodities as wool and hides. 
The United States is an exporter of food-stuffs and pro- 
duces most other commodities in considerable measure. 
Whenever, as has happened during the war, shipping 
facilities are restricted, Great Britain is much more sensi- 
tive to the danger of diminished imports than is the 
United States. Hence a different attitude of the state to- 
ward the food supply. Where in one case there is se- 
curity against anything worse than shortage, in the other 
there is always the possibility of famine conditions. In 
the matter of food, as of ships, England can afford to run 
no risks, and in the case of certain other imported com- 
modities it is not at all to her advantage to do so. 

Great Britain's long experience of war and her peculiar 
geographical situation thus conduce to impel her farther 
in the direction of state control over industry than the 
United States has thus far gone. It might be pertinent at 
this point to inquire which nation had the greater pre- 
dilection for such control. The answer cannot be far to 



I 



seek. England since the eighteenth century has become 
the classic land of laisses faire. Until recently her later- 
day statesmen have done little to fetter the free play of 
competition in industry and commerce, except where com- 
petition has been clearly detrimental to the welfare of her 
people. Most unreservedly committed to the doctrine is 
the Liberal party, in whose hands lay the conduct of the 
war for more than two years. So late as October, 19 16, 
Mr. Barnes could charge this party in the House with 
secret loyalty to its long-professed principles. " I cannot 
help thinking," said he, " that the Government have had 
at the back of their minds a mournful, lingering feeling 
of regret for the demise of an antiquated system or prin- 
ciple, which, as soon as the war began, was promptly 
thrown overboard as useless and dangerous for the pur- 
pose of fighting the war. It has, however, been allowed 
to do its worst in regard to the civil population. The 
policy of laissez faire is no more good in regard to social 
economics than it is in regard to fighting the war. I sub- 
mit to the President of the Board of Trade that it is as 
dead as Queen Anne." ^ Whatever be the truth in this 
charge — and Mr. Runciman freely professed his reluct- 
ance to exert control until it was necessary — the Govern- 
ment can scarcely be accused of precipitate action. Only 
in respect to the railways and the sugar supply was the 
state put in immediate charge. Energetic measures in 
other directions date largely from the end of 191 6. 

If it be true that the Liberal Government abandoned 

1 P. D. C, 1916, Ixxxvi, 436. 



274 



WAR TIME CONTROL OF INDUSTRY 



its laissez faire principles only reluctantly, what may be 
said about the attitude of the United States toward the 
same doctrine? Governmental tradition here was some- 
what different. Whereas throughout the second half of 
the nineteenth century England was a free trade country, 
during the same period industry in the United States was 
fostered by high protective tariffs. To Americans who 
had pointed out that capital was largely benefited thereby, 
it was answered that only thus could the wages of the 
industrial labourer be maintained at a level which raised 
him above his European fellow. Thus there was built 
up the tradition that state interference to prevent the 
unfettered course of trade was legitimate when it con- 
duced to the advantage of certain classes in the com- 
munity. To be sure the political party in power when the 
United States entered the war had not subscribed to this 
doctrine; but just before 1917 it had twice given its sanc- 
tion to state interference in the free play of industrial 
forces. By the Child Labour Act, the Democratic party 
assumed for the central Government authority hitherto 
exercised by the several states, the power, namely, of in- 
suring to young persons in factories humane conditions of 
employment; and by the Adamson Act it guaranteed to 
certain classes of railway employes an eight hour day. 
Thus tradition and sentiment favourable to governmental 
regulation of industry, after being fostered by the Re- 
publican party during its long tenure of office, had been 
reinforced by the action of the Democratic party on the 
eve of the country's entry into the war. 



CONCLUSIONS AND COMPARISONS 



275 



If, then, at the end of 1917 any one were to give an a 
priori answer to the question whether Great Britain or 
the United States was likely to have gone farther in the 
direction of state control over industry, the reply could 
scarcely be an unqualified statement. Predilection and 
tradition, it would be answered, might incline the United 
States more than Great Britain toward regulation or con- 
trol; on the other hand, Great Britain's peculiar geo- 
graphical and industrial position and her reaction toward 
the vicissitudes of a long war would probably have per- 
suaded her to adopt the more energetic measures. In 
temperament Great Britain would be the more hesitant, 
yet circumstances would have conspired to induce her to 
more radical action. 

If now the respective attitudes of the two governments 
toward industry at the end of 1917 be considered, it will 
appear that this diagnosis is correct. The United States 
was still to a considerable extent reliant upon the volun- 
tary co-operation of its citizens. A certain number of 
official regulations had been imposed, two industries had 
been taken over, and a third was likely to be. Great 
Britain, on the other hand, was waiting to find whether 
her last appeal to voluntary effort would meet with a satis- 
factory response; if it should not, regulation or complete 
control would henceforth prevail wherever the industry 
was one of war-time importance or where the food sup- 
ply of the population was in question. 

In the United States the appeal for voluntary co-opera- 
tion from business men, workers, and the public elicited 



2y6 



WAR TIME CONTROL OF INDUSTRY 



for the most part a hearty response. Most publicity was 
given, perhaps, to the campaign for economy in the con- 
sumption of food. The avoidance of waste, the use of 
substitutes for scarce and exportable foods like sugar, 
meat, butter, and wheaten flour, the preference for whole- 
wheat bread or corn bread over white bread, all these 
economics were urged upon consumers. They were 
enforced by lectures and demonstrations until people who 
had never heard of calories began to draw up their menus 
in terms of that abstruse unit. Housewives were asked 
to pledge themselves to adopt all recommendations made 
by the Food Administrator. Various flours were com- 
pounded by mixing inferior grains with wheat and their 
general use was recommended. Relative to the consump- 
tion of only one food did the Government at first 
make any approach toward compulsion. It authorized 
retailers to require, if they so desired, the purchase of 
two pounds of corn meal along with every pound of sugar. 
Apart from this the consumer was not, in 19 17, ham- 
pered, save by the force of public opinion, in procuring 
what foods he liked and in using them as he liked. In 
Great Britain, on the other hand, the waste of food had 
become a criminal offence, the use of a war-bread made 
from whole-wheat flour mixed with inferior flours was 
obligatory, sugar had long been rationed, and other food- 
stuffs were henceforth to be, if the second energetic cam- 
paign for voluntary rationing should prove ineffective. 
In the use of food, compulsion had become the rule while 



«^(^,-%W'*)W^fe'«W!SA%M*''«l^ S«S«('m(S«iiflt&SiKmS«l»*'3«lf ^^^ 



CONCLUSIONS AND COMPARISONS 



2yy 



co-operation still remained the privilege of American con- 
sumers. 

Voluntary co-operation also proved feasible between 
the United States Government and its industrial leaders 
in respect to the acquisition of certain important commo- 
dities. In the summer of 191 7 contracts had to be placed 
for enormous quantities of steel and copper for munitions 
and ships, and these metals were commanding very high 
prices in a war market. The Government, accordingly, 
approached the producers to see whether an arrangement 
could be made advantageous to itself and to the Allied 
powers, henceforth its fellow-purchasers. Behind the in- 
vitation lay, of course, the intimation that concessions 
would be necessary. Conscription of factories as well 
as conscription of men was always possible. No threats, 
however, were needed, and the producers of steel and cop- 
per readily accepted the prices which the Government, act- 
ing on the advice of the Federal Trade Commission, of- 
fered. This achievement in voluntary co-operation left 
a large sphere of essential war industry free from gov- 
ernmental control. Here again English experience has 
differed and has carried His Majesty's Government much 
farther. Anxious to increase the output of munitions at 
the beginning of the war, the Ministry, by the Defence of 
the Realm Act, assumed power to turn into munitions- 
making establishments all plants suitable therefor. To 
still the complaint of labour about proprietors' profits, the 
Munitions of War Act next imposed a limit, restricting 



278 



WAR TIME CONTROL OF INDUSTRY 



CONCLUSIONS AND COMPARISONS 



279 



profits to the average return of the two years before the 
war. The situation thus created differs somewhat from 
that prevaihng in America. Profits allowed to muni- 
tions-makers in Great Britain are less than those accruing 
to the steel and copper producers in the United States; 
for pre-war profits were smaller than are those of 1917 
even though the latter have been reduced by rising costs. 
The American Government, however, reasoned that a 
considerable part of the profits still accruing to producers 
would be swallowed up by the excess profits tax and felt 
further that essential industries should not be left with- 
out stimulus. English establishments, again, found 
themselves "controlled" in other respects. Not only 
were they required to submit to the Ministry of Munitions 
all their rules affecting employes but they likewise were 
subjected to elaborate priority regulations. Priority, of 
course, is to be given in the United States to Government 
needs ; but the procuring of a permit or the showing of a 
contract for warwork is not yet a pre-requisite for the 
getting of any steel or copper by a private buyer, as it is 
in Great Britain. 

Closely associated with the British control of muni- 
tions plants is the control over labour. Both were es- 
tablished by the Munitions of War Act, 1915. In the 
United States labour is still free. Certain unions about 
to strike have, indeed, been asked by President Wilson to 
submit their request for wages to arbitration and in the 
case of other labour demands there undoubtedly will be 
urged similar resort to an arbitration tribunal. America, 



however, has not yet enacted a law providing for com- 
pulsory arbitration. The assent of many of the unions 
affected would first have to be got as it was in England, 
nor is it certain that such assent could be secured. Yet, 
if continual readjustments accompanied by threats of 
strike are to be avoided, either such a law or the unswerv- 
ing co-operation of the unions with the Government seems 
essential. The problem is undoubtedly the most difficult 
of all those created by the war. The United States has 
as yet scarcely faced it. Great Britain in the Munitions 
of War Act and in the measures by which it has been 
amended may have found as satisfactory a solution as is 
possible. Arbitration has with her become to a con- 
siderable degree compulsory and where it was not ac- 
cepted, as it was not by the miners, state control eventually 
became necessary. The policy of fettering labour by the 
requirement of leaving certificates \\n\\ scarcely recom- 
mend itself to American legislators, the more in that it 
has proved a failure in England. The dilution of la- 
bour, on the other hand, by the employment of unskilled 
men and women is likely to become necessary in the 
United States, as it has become in England. Unless in 
their attitude toward war-work the trade unions remain 
heartily co-operative, it is not improbable that meas- 
ures resembling the Munitions of War Act may have 
to be resorted to in America. In its attitude toward la- 
bour as in that toward the producers of steel and copper 
the United States government is still relying upon volun- 
tary co-operation. Great Britain found such reliance in- 



28o 



WAR TIME CONTROL OF INDUSTRY 



adequate, and for two and one-half years has resorted, 
not, to be sure, to complete control, but to very stringent 
regulation. 

Extensively as the United States has trusted to the vol- 
untary co-operation of its citizens in the fields of produc- 
tion and consumption, it has in certain instances resorted 
to governmental regulation. Most noteworthy is the de- 
termination of the selling price of wheat, the regulation 
of the distribution and sale of other important food- 
stuffs, and the supervision of the apportionment of im- 
ported wool and hides. 

On August 30 the United States Government an- 
nounced what it thought should be the maximum price 
for the wheat crop of 1917. In the Food Control Act, 
which had become law on August 10, the farmer was 
guaranteed a minimum price of $2.00 a bushel for the 
wheat harvest of 1918. The Act contained no provision 
for either a maximum or a minimum price for the 1917 
crop. The Government was, however, empowered to 
purchase wheat for itself and the Allies, and at once ap- 
pointed a committee, representative of all interests and 
sections, to determine a fair price. The price reported 
and adopted was $2.20 per bushel at Chicago for the basic 
grade. The Government intimated that it would not be 
content with limited purchases but was prepared to buy 
the entire crop of the country if such action should be 
necessary to stabilize prices. The Food Administrator 
had already announced that all elevators and all large 
mills would be brought under a licencing system. 



CONCLUSIONS AND COMPARISONS 



281 



Hoarding and speculation would thereby be eliminated. 
By this device the price of wheat, although not tech- 
nically fixed for the community at large, was practically 
determined. When the Government, through a newly 
established Grain Corporation, began to buy wheat as it 
came in at the elevators, there was no friction. The far- 
mer was, of course, under no compulsion to sell his grain 
at the Government's price and many producers did hold 
back their stores. So far, however, as the transactions of 
middlemen were concerned profiteering was eliminated. 

The action of England relative to the wheat supply was 
at first more hesitant, but in the end somewhat more com- 
prehensive. At intervals from the beginning of the war 
His Majesty's Government purchased large stores of im- 
ported wheat, anxious to maintain a food reserve for the 
nation. The sale of these stores at opportune times 
served to quiet an excited and rising market. Apart 
from making purchases and sales, the Government after 
1915 tried to modify the price of imported wheat by ex- 
erting control over ocean tonnage. It was not, however, 
until the spring of 19 17 that maximum prices for domestic 
wheat, oats, and barley were established. In the sum- 
mer the policy was continued by the announcement of 
maximum prices for the cereal harvest of 19 18. Mean- 
while the Government was planning to fix a selling price 
for bread, lower than one warranted by its own maximum 
prices for wheat and flour. The loss incurred would, it 
was stated, be met by the Exchequer. In this way Eng- 
lish regulations have shown themselves even more favour- 



282 



WAR TIME CONTROL OF INDUSTRY 



able to the consumer than have those of the United States. 
To the producer, also, greater guarantees have been of- 
fered. Whereas the United States in the Food Act as- 
sures the farmer a minimum price for his wheat in 191 8, 
Great Britain guarantees liberal prices over a period of 
six years. Owing to the submarine menace it was neces- 
sary for her to stimulate the domestic production of ce- 
reals. Even a minimum wage for agricultural labourers 
has become statutory, in the hope that adequate labour will 
be available on the farms. Geographical isolation and 
laggard agricultural wages have thus prompted the pro- 
visions of the Corn Production Bill, circumstances neither 
of which are characteristic of the United States. On the 
other hand, so far as both countries have felt the need of 
regulations favourable to the consumer and to the pro- 
ducer of cereals, but restrictive toward the middleman, 
they have acted similarly. One has been more prompt, 
the other more thorough-going. 

The form of regulation adopted in the United States 
to control the price of wheat readily lent itself to ex- 
tension. Since no power had been conferred upon the 
Executive to fix prices for foodstuffs, all that could be 
done was to check profiteering on the part of middlemen. 
To this end the system of licencing was admirably 
adapted. At the end of 19 17 it had been applied not only 
to the sale of wheat, but to the distribution of many other 

foodstuffs. 

First to claim attention after wheat was sugar. The 
world shortage in this commodity made itself acutely felt 



CONCLUSIONS AND COMPARISONS 



283 



in the United States late in the summer of 191 7. Hold- 
ers of the remainder of the Cuban crop were asking ex- 
orbitant sums for their sugar and retail prices in August 
rapidly advanced 2 or 23^ cents a pound. The new 
Cuban crop would not be available until the end of the 
year. After September, however, the 800,000 tons which 
constitute the beet sugar crop of the United States, would 
come upon the market. Mr. Hoover, accordingly, ap- 
proaching the beet sugar producers, asked for their co- 
operation. This was readily granted and it was agreed 
that their product should be sold at a price which would 
reduce the prevailing market price by i^ cents a pound 
and save the public some $30,000,000 before the end of 
the year. 

The Food Administrator next turned to the distribu- 
tors. In view of the terms conceded by the beet sugar 
growers, refined sugar, it was computed, ought to sell for 
$8.35 a hundred weight and for less toward the end of 
the year. The wholesaler should be entitled to add a 
charge of 25 cents a hundred w^eight and upon this basis 
it was found that sugar could be sold to the consumer at 
9J^ cents in the South and in the Atlantic seaboard states, 
and for somewhat less north of the Ohio and west of the 
Mississippi. To insure that wholesalers and retail- 
ers should keep very nearly within these limits the Gov- 
ernment introduced its licencing scheme. All dealers 
were required to secure a federal licence in order to carry 
on business, and the Government was prepared to with- 
hold licences and supplies from any firms w^hich might 



284 



WAR TIME CONTROL OF INDUSTRY 



attempt to realize undue profits. Refiners and whole- 
salers were instructed not to supply retailers who 
charged exorbitant prices, and Federal Food Administra- 
tors were detailed to different districts both to inform the 
public of proper prices and to report delinquencies on the 
part of dealers. To conserve the supply, confectioners 
were put on rations, and to increase it a $13,000,000 pur- 
chase was made in Louisiana. Stores acquired by the 
British Government were released for the American mar- 
ket. Although instances of excessive charges and of 
the hoarding of sugar were for a time reported, the adapt- 
ation of the sugar trade to the new regulations was rea- 
sonably prompt and a stability of prices like that at- 
tained in the wheat trade soon resulted. 

Before the end of the year further steps were taken 
looking toward the future. On investigation by the Food 
Administration it was found that the cost of refining cane 
sugar was $1.30 a hundred weight. After prolonged 
negotiations the refiners were persuaded to reduce their 
charges from about $1.84 to this amount and it was es- 
timated that the saving to American consumers in 1918 
would be $25,000,000. To apportion all imported sugar 
fairly among American refiners, a committee representa- 
tive of cane sugar refiners was appointed; and to arrange 
for the transportation of foreign sugar and its distribu- 
tion among the Allies, representatives of the English, 
French, Italian, and American Governments were to meet. 
The Cuban crop was bought by the Allied Governments 
at about $4.60 a hundred weight (or $6.00 delivered in 



CONCLUSIONS AND COMPARISONS 



285 



New York), a price which should put sugar into the hands 
of the American consumer in 1918 at from 83^ to 9 cents 
a pound. Mr. Hoover declared that speculation in sugar 
and the taking of excessive profits had been eliminated.^ 

At the same time that licencing was applied to the 
sugar trade, it was extended to many other foodstuffs. 
Ill the middle of October it was announced that on and 
after November i licences would be required for dealing 
in all foods which form '* the prime basis of life." Eggs, 
poultry, milk, meat, vegetables, sugar, flour, bread, wheat 
and other cereals, fish, and canned goods were designated. 
All persons engaged in the import, manufacture, storage, 
and distribution of such foodstuffs were required to se- 
cure a licence from the Food Administrator and among 
the middlemen in question were specified meat packers, 
cold storage warehousemen, millers, canners, grain deal- 
ers, wholesale distributors, and retailers doing a business 
of more than $100,000 a year. Since small grocers 
would scarcely be able to charge more than the large re- 
tailers, it was expected that the system would tend to 
stablize the entire retail market. So flexible and adapt- 
able was the licencing system proving that the ends at- 
tainable by it were practically the ends aimed at by a sys- 
tem of direct price fixing. 

The United States, therefore, within eight months 
after its entrance into the war had taken action to restrain 
a rise in the price of essential foodstuffs such as England 
had in general resorted to only in the third year of the 

2N. Y. Times, Dec. 26, 1917. 



286 



WAR TIME CONTROL OF INDUSTRY 



CONCLUSIONS AND COMPARISONS 



287 



conflict. Mr. Hoover put the issue clearly before a war 
convention of business men held at Atlantic City on Sep- 
tember 19. "If we are to have ascending prices we must 
have ascending wages. But as the wage level rises with 
inequality it . . . [leads] to strikes, disorder, riots, and 
defeat of national efficiency. The verdict of the world's 
experience is in favour of price control as the lesser 
evil." This was the conclusion to which England had 
been forced at the beginning of 1917. Once convinced, 
she adopted out-and-out methods of price fixing. Prices 
were based upon the formula which alone has stood the 
test of experience. At every stage in its manufacture 
the price of a commodity should represent the cost of its 
production increased by a reasonable profit for the 
producer. When the United States' scheme of licencing 
dealers in foodstuffs went into effect, England had al- 
ready fixed maximum prices for most articles of food. 
The control was more direct, since violation of a price 
order became a criminal offence, punishable in the courts. 
In America the indirect control, which would take from 
a dealer his licence or in the case of a small retailer sub- 
ject him to the competition of large concerns, is less pre- 
cise but will probably prove no less efficacious. Both 
schemes are alike in principle, aiming to protect the con- 
sumer against undue profit-taking on the part of all 
dealers in foodstuffs. 

In two respects England has gone farther in an en- 
deavour to protect the consumer. Sugar is not merely 
sold at a price fixed by the Government — a regulation 



which dates from the beginning of the war — but it has 
also since the autumn of 19 17 been impartially distributed 
in limited amounts to consumers. This action followed 
upon long-continued complaints about unfair distribution 
both to communities and to individuals. The American 
scheme scarcely provides against such contingencies but 
the degree of scarcity which makes them possible may 
not come to prevail in the United States. The other 
regulation relative to foodstuffs in which Great Britain 
has been more radical than America is the selling of 
bread at a price lower than the market — even a con- 
trolled market — w^arrants. This subsidizing of bread 
is an expedient to which a Government has recourse only 
as a last resort. It is not impossible that, had the British 
Cabinet striven from the beginnig of the w^ar to eliminate 
middlemen's profits in foodstuffs, it would have avoided 
the growth of popular distrust and criticism which made 
the step necessary. Even the poor do not rebel against 
hardships which they feel are created by the circum- 
stances of the war and which are shared by all classes 
alike. Nothing, on the other hand, makes the worker 
angrier than to see the well-to-do profiting by the nation's 
disaster and profiting in part at his expense. Great 
Britain is paying the penalty for allowing this temper to 
devlop by being obliged to subsidize bread. It will be the 
triumph of American regulation if charges like those 
which have been made in England since the early months 
of the war can be avoided. English experience relative 
to essential foodstuffs seems to be that state control of 



288 



WAR TIME CONTROL OF INDUSTRY 



prices is necessary, if the great mass of consumers are 
not to be antagonized, and that the sooner such control is 
assumed the wiser and more economical it is for the Gov- 
ernment concerned. 

Government regulation in the United States has taken 
the form not only of fixing prices for wheat and of super- 
vising the sale of important foodstuffs, but at the end of 
1 91 7 it was invoked relative to imports of wool, leather, 
rubber, and a few other commodities. In an official an- 
nouncement of December 14, the War Trade Board ex- 
plains why in the case of wool the step became necessary.^ 
Although at the time the price of this commodity in Eng- 
land was only 55 per cent, in excess of its pre-war price, 
the advance in the United States had been 200 per cent. 
Nor was the rise in any considerable degree due to the 
new military demands. The supply of wool in the coun- 
try was ample for the needs of the present and the imme- 
diate future. Inasmuch as the clip in most wool-produc- 
ing countries had increased and might reasonably be ex- 
pected not to decrease, there was no prospective shortage 
in the world's supply. Consumption in the United States 
during 1918 would be little if at all greater than in 1917. 
Through the influence of the Commercial Economy 
Board, substitutes, too, were being introduced and wool 
itself was being diverted from less essential to more 
essential products. The excessive advance in price was 
in reality due to speculation and to hoarding. Importers 
had speculated in an hysterical market; cloth manufac- 

»Ibid., Dec. 15, 1917, p. 2. 



CONCLUSIONS AND COMPARISONS 



289 



turers in distrust were carrying abnormal stocks of wool 
and were contracting with importers for unusual quan- 
tities for far forward delivery; manufacturers of cloth- 
ing were purchasing cloth in excess of their reasonable 
needs. 

Deprecating such action, the War Trade Board at- 
tempted to check it by two regulations. Applicants for 
import licences were henceforth required to agree not to 
sell to any person other than a manufacturer without the 
consent of the Board, and the United States Government 
reserved to itself the right to purchase within ten days 
after Custom House entry any imported wool at a price 
5 per cent, less than the basis price of similar wool in the 
Boston market on July 30, 19 17. The first regulation 
was designed to prevent speculation, the second to check 
the rise of prices by setting a Government valuation. 
That the Board might be assisted in carrying out these 
measures and in procuring an equitable distribution of 
wool to the most essential industries, committees from 
the wool trade and the other trades concerned were ap- 
pointed. It became the. duty of these committees to 
gather for the Government information in the various 
trades, to act as consignees of imported wool and other 
commodities, keeping record of the extent of the imports 
and releasing them to importers under the required guar- 
antee, and, finally, to observe the disposition of the im- 
ports and the observance by the importers of their 
pledges. 

In the case of wool this scheme of regulation stands 



290 



WAR TIME CONTROL OF INDUSTRY 



in contrast with the more complete control developed in 
England during the course of the war. In the United 
States the home clip is still unaffected ; foreign wool may 
still be bought by private importers subject to the Govern- 
ment's right of pre-emption and the Government's licence 
for resale. If importers refrain from speculation they 
may still sell much of their wool to manufacturers at 
a favourable price. How far the Government's option 
may be exercised to keep prices below the level of July 30, 
19 1 7, will probably depend upon circumstances. Wool 
will certainly be diverted to essential industries; but if 
the supply continues liberal, as is hoped, and if substitutes 
are developed, there is no reason why less essential in- 
dustries need suffer. In England, on the other hand, the 
home clip has twice been commandeered by the Govern- 
ment, the Australasian clip twice bought, and the distribu- 
tion of all has been strictly controlled. Indeed, the 
method of control, especially the rationing which became 
necessary in the summer of 19 17, brought sharp criticism 
from the trade. Only by the establishment of a Board 
representative of the trade and by the resumption of 
somewhat more liberal apportionments was the dissatis- 
faction at all allayed. The motives which induced the 
English and American Governments to assume control 
over wool differed somewhat and in this lay the reason 
for different procedure. England was concerned about 
both the supply and the rise in price; the United States 
professes assurance regarding supplies, but great concern 
about high prices. Since English complaints arose from 



CONCLUSIONS AND COMPARISONS 



291 



rationing rather than from the closing of a free mar- 
ket, American manufacturers need not expect from the 
new regulations hardships like those experienced in Eng- 
land, but pronounced benefits instead. The American 
scheme is a simple one to check rising prices. Unless 
the supply of wool diminishes or unless hoarding and 
speculation continue, there would seem to be no reason 
why the United States Government should purchase 
either the home or a foreign wool clip. The same rea- 
soning applies to hides and leather, commodities which 
the English Government itself does not control to the 
extent that it controls wool. What England has demon- 
strated in the case of wool is that government action can 
keep prices within bounds, and this for America has be- 
come a matter of some concern. 

In only two fields of industry had the United States 
Government by the close of 19 17 assumed complete con- 
trol, although in a third it seemed about to do so. The 
two were shipping and railway transportation, the third 
was the working of the coal mines. In the case of ship- 
ping, the action had been most prompt. On October 15, 
191 7, all merchant ships above 2500 tons gross were re- 
cpiisitioned, practically blue-book rates were fixed, and 
the movement of the vessels in question was henceforth 
at the Government's will. Such decisive action on the 
part of the state is in marked contrast with British policy, 
although the latter is at length in accord. 

Nothing probably provoked more bitter charges of 
profiteering in England and caused more popular discon- 



292 



WAR TIME CONTROL OF INDUSTRY 



tent than did the liberty long granted to a part of the 
British mercantile marine to charge high freights. The 
annual reports of steamship companies confirmed the sus- 
picion harboured by the indignant British consumer. 
The legislation demanded relative to the cost of food wa^ 
closely connected with the cry that the Government 
should control shipping rates. Slowly the Government 
yielded. At first it acted to secure the army's supply of 
meat from the Argentine at reasonable prices; next it 
deflected tonnage to the North Atlantic to insure the grain 
supply; lastly, it substituted for the agreement by which 
these grain boats were bringing their cargoes its own 
blue-book rates. Public opinion was slowly won over 
and by the autumn of 1917 the subsidized loaf at length 
convinced it that the Government preferred to pay for 
bread rather than attempt further to reduce shipping 
rates. The United States was not of course in a position 
to suffer in the same way as England from high oceanic 
freights, nor was its mercantile marine comparable in 
size with that of Great Britain. Although, therefore, the 
problem in America was a simpler one, the promptitude 
with which it was handled, embodies, whether con- 
sciously or not, the wisdom got by Great Britain through 
bitter experience. 

In another respect the United States took more de- 
cisive action than did Great Britain in the matter of mer- 
chant shipping. By appropriation of Congress in 19 17 
and 1918 neariy $2,000,000,000 will be devoted to the 
building of a large merchant marine to supplement the 



CONCLUSIONS AND COMPARISONS 



293 



small one already existing. The need for ships to carry 
troops and supplies to Europe, is, of course, imperative. 
Since private firms, even if subsidized, could not be 
trusted to build the requisite tonnage, the Government was 
forced to become the builder and owner of a mercantile 
fleet. Great Britain had different and more encourag- 
ing traditions. Annually her shipbuilders had turned out 
some 2,000,000 tons of merchant shipping, the Govern- 
ment at most advancing a subsidy to steamship lines which 
carried mails or would put their ships at the Government's 
disposal in time of war. When the submarine ravages 
of 19 1 7 made necessary the increased building of mer- 
chant ships, the old methods could be relied upon. Only 
labour and skill had to be put at the disposal of the ship- 
building firms. The Government thus avoided the direct 
responsibility thrust upon the United States, that of be- 
coming a merchant shipper on its own account. The 
administrator of an enormous amount of requisitioned 
tonnage Great Britain has temporarily become; but she 
has at least escaped this last venture in industrial initi- 
ative. The United States, in general more reliant upon 
the voluntary action of its citizens, has in this matter 
been obliged to take the more radical step. 

The second great industry of which the United States 
has taken complete control is railway transportation. 
For a time after the outbreak of the war it seemed as if 
reliance upon the voluntary action of railway men might 
prove efficacious. The fifty leading railway presidents 
of the country declared themselves ready to eliminate 



294 



WAR TIME CONTROL OF INDUSTRY 



competition and to co-operate in problems of transporta- 
tion. Independent companies resigned for the time 
their freedom of action, and entrusted to a commission 
of five experienced men chosen by the President of the 
United States the determination of important policies. 
This Railroads' War Board at once devoted itself to 
co-ordinating the railway resources of the country. 
Through its efforts needless passenger trains were taken 
off, freight congestion was often averted by the skilful 
handling of empty cars, large quantities of supplies and 
many thousands of men were expeditiously transported 
for military purposes. '' It was thought to be in the 
spirit of American institutions," said President Wilson 
in December, ''to attempt to do everything that was 
necessary through private management, and if zeal and 
ability and patriotic motive could have accomplished the 
necessary unification of administration, it would cer- 
tainly have been accomplished ; but no zeal or ability could 
overcome insuperable obstacles. . . ." ^ 

The obstacles in question had become only too appar- 
ent at the time when he spoke. Increasing costs of 
operation, due largely to advancing wages and the high 
price of commodities, diminished the net returns of nearly 
all roads, and demands for still higher wages were in the 
air. Although the appeal of the Eastern roads to the 
Interstate Commerce Commission for an increase in 
freight rates seemed assured of a cordial reception, it 
quickly became apparent that this remedy would not meet 

* Ibid., Dec. 27, 1917, P- 2. 



CONCLUSIONS AND COMPARISONS 



295 



all difficulties. Greater sums of money than higher 
freights would promptly yield were essential and could 
be obtained in the market only at ruinous rates of interest. 
Several roads which with public spirit had responded to 
the desires of the Railroads' War Board had, owing to 
circumstances, suffered peculiarly from so doing. At the 
same time transportation demands became so great that 
congestion of traffic ensued. The issue of priority or- 
ders — orders which were sometimes in conflict — only 
increased the confusion and delay. At this point the 
Interstate Commerce Commission recommended one of 
two remedies. Either the Government should take over 
the administration of the railways during the war, ren- 
dering therefor suitable compensation and providing ade- 
quate maintenance, or, if the roads were left in the hands 
of the companies, there should be granted an increase in 
freights and a loan from the Government, while legisla- 
tive hindrances to combination should be suspended. 

Of the alternatives the Government chose the first. 
" It has become unmistakably plain," declared President 
Wilson, *' that only under Government administration 
can the entire equipment of the several systems of trans- 
portation be fully and unreservedly thrown into a com- 
mon service without injurious discrimination against par- 
ticular properties. Only under Government administra- 
tion can an absolutely unrestricted and unembarrassed 
common use be made of all tracks, terminals, terminal 
facilities, and equipment of every kind. Only under that 
authority can new terminals be constructed and developed 



296 



WAR TIME CONTROL OF INDUSTRY 



without regard to the requirements or limitations of par- 
ticular roads." ^ 

By proclamation of December 26, 1917, the President, 
therefore, announced that on December 2S he would take 
possession of all railway systems in the United States. 
Appointing the Secretary of the Treasury, Mr. W. G. 
McAdoo, Director General of Railroads, he recom- 
mended to Congress provisions for the maintenance of 
the equipment of the roads during the period of Federal 
control and for the payment of net operating income 
equal in each case to the average net income of the three 
years preceding June 30, 1917. Mr. McAdoo's first in- 
structions to railway presidents directed them to continue 
the operation of their roads and to use every effort to 
increase efficiency, particularly in moving traffic by the 
most convenient and expeditious routes. The existing 
Railroads' War Board was continued, as well as the 
various co-operating committees that it had formed.^ 

The measure which came before Congress embodied the 
President's recommendations as to maintenance of the 
roads and remuneration of the companies. It added pro- 
visions for the creation of a " revolving fund " of $500,- 
000,000 to meet the expenses of Federal control, for the 
issue with the President's sanction of new securities by 
the roads, for the optional purchase of such securities by 
the Government, and for the continuance of control " dur- 
ing the period of the war and until Congress shall there- 

5 Ibid., Jan. 5, 1918. 
*Ibid., Dec. 27, 29, 1917. 



CONCLUSIONS AND COMPARISONS 



297 



after order otherwise." At the same time Mr. McAdoo 
came to an understanding with the heads of the four 
important railway brotherhoods. A committee of four 
representative men, he announced, would be appointed to 
investigate the relation of employes to the railways dur- 
ing the period of Governmental control and to inquire 
into the demands recently presented to the companies. 
The findings of the committee as to wages would be 
operative from January i, 1918.'^ This fair and even 
generous attitude of the Government toward the com- 
panies and toward their employes called forth many ex- 
pressions of approval and assurances of co-operation. 

The assumption of Federal control over railways in 
the United States was not uninfluenced by English prec- 
edent. The prompt action of England in taking similar 
steps at the outbreak of the war and the satisfactory 
working of government control there were often referred 
to in America. The motive in both countries was the 
same, the imperative war-time need of an efficient trans- 
portation system, unhampered by the rivalries or restric- 
tions that might arise under a system of competing roads. 
The measures adopted were not dissimilar. In England 
the immediate management of the roads is left with the 
heads of the various systems sitting as a Board, but the 
final decision of important policies resides with the Presi- 
dent of the Board of Trade. In America the presidents 
of the roads continue their individual administration, sub- 
ject to the direction of a central Board of selected railway 

7 Ibid., Jan. 5, 1918. 



298 



WAR TIME CONTROL OF INDUSTRY 



executives, already experienced, and to the final ruling 
of a Director who is already Secretary of the Treasury. 
Financially, too, England and America have acted on the 
same principle. Both Governments guarantee to the 
roads maintenance of equipment and remuneration of 
stockholders. In England the remuneration is the net 
profit during the year preceding the war, in America the 
average net profit during the first three years of the war. 
In England, however, the Government makes no pay- 
ments for services rendered to itself, such being looked 
upon as a return for profits guaranteed. In America, 
book-keeping is likely to be continued in the usual manner, 
the expenditures of the Government and the services ren- 
dered it being accurately recorded. In America, as in 
England, provision is made for the investigation of de- 
mands for higher wages, and the former Government 
stands ready, as the latter has for three years stood ready, 
to meet the reasonable requests of employes. In all es- 
sentials the English scheme has been adopted, and this 
step of the United States Government is perhaps more 
closely imitative of England than any other which has 
thus far been taken. 

At the end of 1917, however, there was considerable 
likelihood that English experience with the coal mines 
might become a precedent and that the mines of the 
United States might soon pass more completely under 
government control. As in the case of the railways, the 
mines of the latter country were at first left under private 
operation. Soon, nevertheless, a measure of control was 



CONCLUSIONS AND COMPARISONS 



299 



introduced and took the form of price-fixing. Acting 
under the Food Control Law, which conferred upon 
the Executive power to control the fuel supply of 
the country. President Wilson in August issued price 
schedules applicable to the sale of bituminous and anthra- 
cite coal at the mines. The prices were the outcome of 
investigations carried on by the Federal Trade Commis- 
sion. They purported to be based upon the actual cost 
of production and were deemed to be, the President re- 
marked, " not only fair and just but liberal as well." 
Concurrently with their publication a Fuel Administrator 
was appointed. Not merely was he to enforce the price 
schedules but he was to supervise the distribution of coal 
and the operations of middlemen and retailers. Very 
soon there was enough to occupy his attention. Pro- 
ducers complained that the price of bituminous coal had 
been fixed too low and would compel the closing of the 
smaller mines. Consumers complained that they were 
being charged by the retailers more than the pit-head 
prices would warrant. Retailers complained that sup- 
plies from the mines were not forthcoming. The 
miners, finally, complained that their wages were in- 
adequate and demanded higher ones, threatening a strike. 
How the price for bituminous coal was advanced, how 
retailers were restrained, how supplies were hurried for- 
ward to various consuming centres, and how the miners 
w^ere given higher wages constitutes a tale of considerable 
length. Its instructiveness lies in the demonstration that 
an attempt to regulate an industry at one point is likely 



I 



300 



WAR TIME CONTROL OF INDUSTRY 



to involve the regulation of every part of it. Pit-head 
prices involve the cost of the miner's labour, and when 
this has to be advanced under threat of a strike, pit-head 
prices must be revised. On the other hand, a close watch 
has to be kept upon the middleman and the retailer to see 
that no profiteering creeps in between the pit-head and 
the consumer's furnace. 

At the end of the year the Fuel Administrator, Mr. 
Garfield, told a Senate Committee that more extended 
control of the coal mines would be inevitable if the war 
continued, and that he himself would have put into effect 
such control as soon as he took office, had there not been 
danger that the sudden change would defeat the end at 
which he aimed, the supplying of coal to those who needed 
it most.^ Lack of transportation facilities increasingly 
complicated the situation. It was responsible for a 
shortage in available coal of 20,166,442 tons between 
August 28 and November 24. Some immediate relief 
was got through priority orders, although in some in- 
stances conflicting priority orders seem to have aggravated 
the difficulties. In December a coal famine prevailed in 
many regions and the first task taken in hand by the new 
Director of Railroads was the hurrying of coal to critical 
points. That such a situation might not again arise, Mr. 
Garfield formulated a plan closely modelled upon the 
English one of September, 1917. The United States he 
proposed to divide into twenty districts, each containing 
a coal producing area and each presided over by an agent 

• Ibid., Dec. 27, 191 7, p. i. 



CONCLUSIONS AND COMPARISONS 



301 



of the Fuel Administration. Between districts no 
" cross-hauling " should be allowed and each agent should 
see to it that coal for his district came from the mines 
situated therein. Long hauls, it was hoped, would thus 
no more tie up cars, and the reduced freights would lessen 
prices for consumers. Only a few months before, the 
Controller of Coal Mines in England had, in order to 
forestall similar difficulties of transportation, mapped out 
that country into producing and distributing areas. That 
such a plan might be introduced into the United States 
it was necessary that contracts involving transportation 
of coal between points in different districts be no longer 
drawn. On December 2y, accordingly, the Fuel Admin- 
istrator issued an order which prohibited contracts that 
might involve " cross hauling," and in addition provided 
that no contract should be for a longer period than one 
year, that the prices stipulated should not exceed prices 
fixed by the Government, and that, at the request of the 
Fuel Administrator, the contract itself should be forth- 
with cancelled. Investigation had shown that prac- 
tically all existing contracts would expire by April i, 
1918. As a result, the new ruling would by that date 
bring the distribution of coal pretty completely under 
the Fuel Administration. The running of the mines, to 
be sure, would still be left with the owners ; but on this 
point Mr. Garfield told the Senate Committee that the 
big coal operators had assured him of their readiness to 
deliver their properties the moment the Government asked 
for them. At the end of the year, therefore, govern- 



302 



WAR TIME CONTROL OF INDUSTRY 



ment control of the coal mines had already passed beyond 
the stage of price fixing to that of control over distribu- 
tion, with a prospect that complete Federal administra- 
tion was not far in the future. 

England's experience with coal mines and miners has 
been more grievous than that of the United States, has 
been distributed over a longer period of time, and has 
at length reached its logical conclusion. Complaints 
from consumers about the high prices of coal led, in the 
summer of 191 5, to the introduction of the Price of Coal 
(Limitation) Bill. Before it could be passed the miners 
of South Wales, demanding a new and liberal wage- 
schedule, precipitated the most disastrous strike of the 
war, and after the passage of the bill difficulties did not 
cease. The maximum prices established had to be in- 
creased, retailers had to be controlled, and miners had to 
be further propitiated. At length the miners' demands 
rendered the situation intolerable and early in 19 17 
the state assumed control of all mines. It would prob- 
ably have been better had this step been taken long before 
it was. Once in control, the Government proceeded to 
regulate the distribution of coal with a view to the relief 
of the transportation system, and this measure was fol- 
lowed by a virtual rationing of the metropolitan area. 

In the United States a readiness has been shown to 
profit by English experience in fixing maximum prices for 
coal and in establishing production and consumption areas. 
Without doubt the American Government will not allow 
a disturbing labour situation to arise. Wages in certain 



CONCLUSIONS AND COMPARISONS 



303 



mines have already been once advanced under Govern- 
ment persuasion and with Government assistance. The 
complete control of the mines which England has found 
essential would forestall any difficulty of the kind and 
such control is probably foreshadowed. Whereas the 
prompt action of England relative to the railways has 
been a happy precedent for the United States, her tardy 
action and resultant misfortunes relative to shipping and 
the coal mines may well serve as warnings. In the case 
of shipping the warning has not been without effect, in 
the case of the mines it is not likely to be. 

At this point the comparison between the war-time ex- 
perience of the two countries relative to the control of 
industry may be concluded. Despite the somewhat dif- 
ferent circumstances under which Great Britain has often 
been forced to act, the United States may in a general 
way learn much from her. The control of many food- 
stuffs, of wool, and of hides has in England been pre- 
cipitated by dependence upon foreign sources of supply. 
America seldom has to face this difficulty in an acute 
form. If, however, for various reasons a shortage in the 
supply of foodstuffs, wool, or hides should arise, the 
experiment of stringent governmental control has been 
made and the workings of it are observable. Of more 
immediate value, perhaps, is English experience in the 
management of railways, coal mines, munitions works, 
and organized labour. By the prompt taking over of her 
railways, the tardy taking over of her mines, the efficient 
control over her munition shops, and the statutory co- 



304 



WAR TIME CONTROL OF INDUSTRY 



Operation of labour, England has brought great essential 
industries to a stage of efficiency which America may well 
be proud to attain. It was at first hoped that voluntary 
co-operation in the United States might achieve what in 
England has required state control. This hope is no 
longer entertained in regard to merchant shipping or the 
railways. It is fading in the case of the coal mines. Its 
brightness has been dimmed by the introduction of 
various restrictions upon trading in foodstuffs and in 
wool. It persists still relative only to the production of 
munitions, the conciliation of labour, and the consump- 
tion of food. Always, however, as the hope wanes, the 
experiences recorded in the preceding chapters are turned 
to, and the wisdom taught by them is carefully pondered. 



INDEX 



Absenteeism at coal mines, 63. 
Agriculture, xiii, 249-268. 
Agricultural Committees, War, 

253, 256. 
Agricultural machinery, 257-258. 
Agricultural Wages Board, 264- 

265. 

Arable, conversion to, 249-250, 

254-255, 267. 
Arbitration, compulsory, 31, 52, 

54. 
Argentina, 105, 132-133, i47, 184- 

185, 205. 
Armament firms, 15. 
Australia, 106, iio-iii, 147, 153, 

184, 205, 207, 254. 

Bacon, 195-197. 

Beef, prime, 191, cf. meat. 

Beer, 217-219. 

Blue-book rates, xv, 141, 152, 157, 

206. 
Board of Trade, i, 5-^, yy, 210. 
Bonus, war, ix, 3-8, 70. 
Boots, 129 ff.; standard, 138. 
Bread, 198 ff. 

Coal, exportation of, 64, 79-81; 
for London, 12, 65-68, 78-79' 
96-100; prices of, 66-69, 77-85, 
90; transportation of, 12, 67, 
8I4, 300. 

Coal and Coke Committees, Dis- 
trict, 13, 80, 92. 

Coal mines, 61 ff. ; Controller of, 
12, ^z, 98-100; output of, 62- 
63, 93-95; owners of, 68-69, 

305 



71-72, 86-S8, 94; in the United 
States, 298-301. 

Commission of Inquiry into In- 
dustrial Unrest, 52-59. 

Consumption, economy in, xiii, 

64, 95-96, 173-177, 188, 211-232, 
276. 

Controlled establishments, 30. 
Copper, prices of, 39-41, 277-27^. 
Corn Production Bill, 263-265. 
Costs, conversion, 36, 108, 114, 
244. 

Cotton, importation of, 160-162; 
operatives, 29, 31. 

Defence of the Realm Act, x, 
16, 82, 210. 

Dilution of labour, 29, 50-52, 56. 

Docks, congestion at, 9. 

Engineers, Amalgamated Society 
of, 49-51, 56. 

Engineers and Firemen, Asso- 
ciated Society of Locomotive 
2, 6^. 

Exportation, of coal, 64; of 
wool, 104-107; of steel, 42. 

Fertilizers, 252, 256. 

Food, xii, 167-248; waste of, 

231-232; cf. prices. 
Food Control Committees, 179- 

180, 247. 
Food Controller, 209-211, 179, 

221, 227, 242. 

George, Lloyd, as Chancellor of 
the Exchequer, 15, 16, 20, 22 \ 



3o6 



INDEX 



as Minister of Munitions, 23- 
34, 91 ; as Prime Minister, 45, 
76-77, 83. 

Hides and leather, xi, 129-139. 

Importation, of meat, 183-187; 
of sugar, 170; of wheat, 198- 
207; restriction of, 150-151, 
159-162. 

India, 134-135, 200, 202. 

Insurance for shipping, 143. 

Labour, ix, 2 ff., 17 ff., 31, 45, 48- 

60, 187, 260-261, 278-279. 
Laissez-faire, Doctrine of, 273- 

275- 
Leaving Certificates, x, 31, 53, 

56. 
Liquor, 22, 55, 217-219. 

Machine tools, 15. 

Meals Orders, Public, 219-221, 
230. 

Meat, xi, 147, 153, 181-197 ; sup- 
ply for the army, 183-184. 

Military Service Act (1916), 50, 

55. 
Milk, 237-240. 

Milling Orders, 211-213, 216. 
Milner's Committee, Lord, 249- 

254- 
Miners, xi, 29, 31, 69-77, 88-90, 

94- 

Munitions, x, 14 ff., 25 ff., 35 ff. ; 
Ministry of, 23 ff., 43-47 ; Vol- 
unteers, 32. 

Munitions of War Act (1915), 
X, 30 ff., Z7y 53, 72,-7(>- 

Paper, 150, 159. 
Passenger traffic, 9-10. 
Periods of the war, vii. 
Potatoes, 233-236. 



Prices, of coal, 66-69; of food, 
168; of hides and leather, 130- 
136; of iron and steel, 39; of 
meat, 184-193; of sugar, 171- 
174, 283-285; of wheat, 199- 
205, 241, 246, 265-266, 280; of 
wool, 107-111, 114-115, 288- 
289; maximum, xii, 39-41, 168, 
172-173, 189-193, 232-246, 265- 
266, 280, 286-287; minimum, 
250-251, 262, 280. 

Price of Coal (Limitation) Act, 
77-79, 84, 90. 

Priority regulations, 43-46, 92, 
I 18-124. 

Production, Committee on, 17, 
19, 21, 54. 

Profiteering, ix, 152, 154, 200-201. 

Prothero, R. E., 190-192, 195, 254. 

Railways, congestion on, 9, 295 ; 

fares on, 10; state control of, 

I ff., 293-298. 
Railwaymen, National Union of, 

Rationing, of coal, 97-99; of cot- 
ton, 160-162; of sugar, 179- 
181; of wool, 1 18-124; volun- 
tary, 221-230. 

Runciman, W., 72, 7S, 210, 232. 

Shipping, xi, 140 ff. ; construction 
of new, 164-165; freight rates 
for, 67, 80, 143-148, 153, 158, 
184-185; losses in tonnage, 
163 ; requisitioning of, 147- 
149, 152-153, 157, 204, 291; 
profiteering in, 151-152, 154, 
157. 

Shoddy, use of, 116. 

Speculation, in coal, 66 ; in hides, 
132, 134-135 ; in steel and cop- 
per, 41 ; in wool, 288. 

Stanley, Sir Albert, 6-8. 



INDEX 



307 



Steel, exportation of, 42; prices 
of, 39 ff., 277-278. 

Strikes, 5, 7, 18 ff., 48-51, 68-77. 

Subsidized bread, 245, 287. 

Sugar, ix, 169-181 ; Commission, 
Royal, 170, 173, 178; consump- 
tion of, 173-177; prices of, 
1 71-174, 283-285. 

Syndicalists, 75. 



Tobacco, 159. 

Tonnage, mercantile, 141, 163. 

Tractors, 257-258. 

Trade unions, x, 2 ff., 18 ff., 125 ; 

Advisory Committee, 56-58; 

regulations, 29-33. 
Transportation, economies in, 9- 

13 ; of coal, 12, 67. 



Treasury Conference, 20, 33. 

Wages, 3-«, 53, 55, 57, 70-76, 8&- 

90; agricultural, 251, 263-264. 
War-bread, 211-217. 
War Savings Committee, 223. 
Wheat, ix; Commission, Royal, 

205-208; prices of, 199-205; 

supply of, 199-206, 209, 227; 

stimulus to production of, 

250 ff. 
Whitley Report, 54, 58. 
Wool, xi, loi ff. ; prices of, 107- 

III, 114-115; state purchase of, 

108-112, 125; supply of, 102- 

106 ; in the United States, 288- 

291. 
Women, in agriculture, 259; in 

industry, 29, 34, 53, 55. 



Printed in the United States of America. 






T 



HE following pages contain advertisements of a 
few of the Macmiilan books on kindred subjects. 



Cooperation : The Hope of the Consumer 

By EMERSON P. HARRIS 

President of the Montclair Cooperative Society. 
With an Introduction by JOHN GRAHAM BROOKS 

Cloth, i2mo 

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By RICHARD T. ELY, RALPH H. HESS, CHARLES 
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Cloth, 8vo, $2.00 



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The Food Problem 



By VERNON KELLOGG and ALONZO E. TAYLOR 



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" Food is always more or less of a problem in every phase of its production, 
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TABLE OF CONTENTS 

Introduction: The International Problem. 

Part I. The Problem and the Solution. 

Chapter I. The Food Situation of the Western Allies and the United States. 

II. Food Administration. 

in. How England, France, and Italy Are Controlling and Saving Food. 

IV. Food Control in Germany and Its Lessons. 

Part II. The Technology of Food Use. 

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VII. The Sociology of Nutrition {Continued), 
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Conclusion : Patriotism and Food. 



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The Soul of Democracy 



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